Estate Duty is levied on the worldwide property and deemed property of a natural person who is ordinarily resident in South Africa and on South African property of non-residents. Various deductions under section 4 of the Estate Duty Act 1955, are allowed to determine the net value of the estate. An abetment of R3.5 million is allowed against the net value of the estate to determine the dutiable of the estate. The Estate Duty is levied on the dutiable value of an estate at a rate of 20% on the first R30 million and at a rate of 25% on the dutiable value of the estate above R30 million.
The determination of Estate Duty can be summarised as follows – All income received or accrued before the deceased’s death is taxable in the hands of the deceased person up until date of death , and will be administered by the executor or administrator acting as the deceased’s representative taxpayer. After the date of death, the deceased estate comes into existence. The assets of the deceased person will be held by the deceased estate until the liquidation and distribution account has lain for inspection and become final under section 35 (12) of the Administration of Estates Act , after which the assets will be either handed over to the heirs or delivered to the trustee of a trust estate.
Income, which accrues to the estate after the death of the deceased but before the distribution of assets to the beneficiaries , is dealt with under section 25 of the Income Tax Act.