New legislation on Estate Tax

Charm_TaxMost people find taxes very complicated. Albert Einstein said it himself: The hardest thing in the world to understand is the income tax.

Don’t be intimidated at all! Keep in mind that my team at Chartered Tax is here to help. We certainly don’t expect you to study all the tax implications, especially the new Tax laws relating to Estates, as we are here to support you through your journey.

We are, however, experiencing some delays in the process of winding up Deceased Estates, and wanted to share some of the most significant changes implemented in March 2016. These may help to guide your conversations with your Legacy & Trust Specialists during your Estate Planning meetings.

Here is a short summary of the new Tax laws on Deceased Estates:

Income Tax

Prior to the changes in legislation, post-death income was taxable in the hands of the beneficiary. The new legislation states that for deaths after 1 March 2016, income is taxable in a new entity referred to as a Deceased Estate. Put simply, after the date of death, the Deceased Estate comes into existence, and is liable for tax.
There are, however, exceptions to this rule: for example, the assets accrued to the surviving spouse on the death of the first dying spouse are not deemed to have been disposed of on the death of the deceased, and taxes are not payable at this point.

Value Added Tax (VAT)
If the deceased was registered as a VAT vendor, the Executor may have to register the estate for VAT purposes and there may be VAT implications.

Estate Taxes
With the Estate now seen as a separate Income Tax entity, any income accrued before death and additional income to the Estate, whether through acquisitions or disposal of assets, after the date of death, is now taxable.

Capital Gains Tax (CGT)
Capital Gains Tax is payable by the Estate. This payment is due before the inheritance is transferred to the beneficiaries. Beneficiaries only become liable for capital gain or loss once the asset inherited is sold or disposed of.

While all this may seem very complicated, remember that your Retiremeant™, Tax, and Legacy & Trust Specialists will guide you every step of the way. To assist us in winding up Estates more timeously, here are a few tips to keep in mind:

1.We are here to help. While we ensure that Estate taxes are taken care of and SARS requirements are met, we will also make you aware of what the Capital Gains Tax and Estate duties are likely to be. We plan to ensure that the Estate has enough liquidity.
2.Remember to file your Tax returns annually, and if you are married, this applies to both spouses.
3.Keep your Tax Clearance Certificates in a safe and accessible place. Having up-to-date Tax returns and Certificates speeds up the winding up Estate process.
4.Discuss any other entities that should be tax compliant with your Planning Specialist; for example, your business, a company that you may be a shareholder or director of, a Trust that you may be beneficiary or trustee of.
Taxes aren’t as intimidating as you think! It’s just a matter of incorporating these conversations into your Retiremeant™ planning process. Added to that, a good dash of administration and filing goes a long way!


We hope that you enjoy the new format of The Beacon, which will be appearing four times a year, and replaces the monthly Reporting from the Helm, and The Journey. Our in-house services – Invest, Tax, and Legacy & Trust – are represented, in addition to our RetiremeantTM and Wealth Creation teams.



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