This document contains a detailed summary of TAX3702 Learning Unit 12 - Estate Duty- and includes all material in the prescribed textbooks - A student's Approach to Income Tax: Natural persons, 2021 Edition. It also includes additional activities. If you do not have access to the prescribed textboo...
TAX3702
Taxation of individuals
Learning Unit 11
Estate duty
, Introduction
Learning outcomes
Prescribed study material for this study unit
Section of prescribed book that you may ignore
Contents of learning unit
11.1 Background
11.2 Calculation of estate duty
Learning Unit 11 11.3 Property
11.3.1 General definition of “property”
Estate Duty
11.3.2 Limited interests and annuities included as property
11.4 Deemed property
11.5 Deductions
11.6 Section 4A abatement
11.7 Successive death rebate
11.8 Deduction of foreign death duty and transfer duty
11.9 Persons liable for payment of estate duty
11.10 Assessment
11.11 Marriage in community of property
11.12 Summary
11.13 Questions
, Introduction
Estate duty = is a wealth tax levied on the transfer of wealth from one person to another in the event of death.
• Estate duty is levied in terms of the Estate Duty Act 45 of 1955, which is administered by the Commissioner of the South African Revenue Service (SARS).
• The executor of a deceased estate will calculate the estate duty liability in the estate, submit an estate duty return form (Rev 267) to the Master and will also be
responsible for paying the relevant amount to SARS.
• However, in certain circumstances the executor can recover the estate duty payable from the beneficiaries.
The estate duty liability of a deceased estate can be calculated by using the following framework:
, Learning Outcomes
After working through this learning unit, you should be able to
apply the framework for calculating the estate duty liability of a deceased estate
identify and value all property items including limited interests in assets contained in a deceased estate that will be
subject to estate duty
identify and value all property deemed to be property in a deceased estate that will be subject to estate duty
list and apply the different deductions that will be allowed from a deceased estate for estate duty purposes
list and apply the relevant rebates that will be allowed to determine the net estate duty payable by a deceased estate
apportion the calculated amount of estate duty payable between the estate and beneficiaries who are responsible
for paying this tax
determine estate duty for marriages in community of property
,Prescribed study material for this study unit & Section of
prescribed book that you may ignore
Prescribed study material for this study unit
= Chapter 12 in the prescribed book.
Section of prescribed book that you may ignore
= No sections may be ignored.
,11.1 Background
Prescribed book section: 12.1
, 11.1 Background
Estate Duty
When a South African resident dies,
• he or she will be liable for estate duty on all property and deemed property in his or her estate
• according to the provisions of the Estate Duty Act 45 of 1955 as amended.
• Non-residents could also be liable for estate duty in South Africa if they own property situated in South Africa.
, Estate duty = is one of the most significant taxes on wealth currently
charged in South Africa.
• The purpose = of estate duty is to tax the transfer of wealth from
one person to another in the event of death.
• The Estate Duty Act 45 of 1955 came into operation on 1 April 1955
and replaced the Death Duties Act 29 of 1922.
• The Estate Duty Act is administered by the Commissioner of the
11.1 South African Revenue Service (SARS) whose office is responsible
for the collection of estate duty.
Background • The Estate Duty Act is the statute that creates the obligation to pay
estate duty and deals with the administration of the collection
process.
• Every executor or administrator of a deceased estate is compelled
to compute the estate duty liability in the estate they are
administering.
• It is also the responsibility of this executor or administrator to pay
this duty to the Commissioner.
• The estate duty addendum is a subsection of the liquidation and
distribution account for a deceased estate in terms of the
Administration of Estates Act 66 of 1965.
, Critical questions In this chapter, the following questions are discussed:
When is estate duty payable?
11.1 How much estate duty is payable?
On what amount is the estate duty calculated?
Background At what value do we need to include property in the estate of a deceased?
What is allowed as a deduction in the estate of a deceased?
Are any rebates available against the estate duty calculated?
Is any of the estate duty recoverable from any of the legatees in the estate?
, 11.2 Calculation of estate duty
Prescribed book section: 12.2
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