When a person dies, they leave behind an estate which includes everything they own. Estate Duty is payable on the estate of every person who dies and whose nett estate is in excess of R3,5 million. It is charged at the rate of 20%. Currently, SARS is responsible for collecting the Estate Duty of a deceased person.

How does an estate get reported to SARS?

Even if Estate Duty does not apply to you, it is still necessary to inform SARS that the person is deceased. It is recommended that you consult with a legal expert when going through such as process.

Copies of the following documents must be sent to SARS:

• Death certificate or death notice.
• Identity document of the deceased.
• Letters of Executorship (J238) (if applicable).
• Letter of Authority (J170) (in cases where the estate is less than R250 000).
• Certified copy of the executor’s identity document.
• Power of attorney (if applicable).
• The name, address and contact details of the executor or agent.
• The last Will and Testament of the deceased.
• An inventory of the deceased’s assets.
• The liquidation and distribution accounts (if available).

These documents may be sent to the relevant Centralised Processing Centres that is closest to the Master of the High Court where the estate is being administered.

How does Estate Duty work in relation to an inheritance?

All income received or accrued before the deceased’s death is taxable in the hands of the deceased up until the date of death, and will be administered by the executor or administrator acting as the deceased’s representative taxpayer.

• After the date of death of a person, a new taxable entity comes into existence – the “estate”.
• The assets of the deceased will be held by the 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.

References:

• http://www.sars.gov.za/TaxTypes/EstateDuty/Pages/default.aspx
• http://www.sars.gov.za/ClientSegments/Individuals/Tax-Stages/Pages/Tax-and-Inheritance.aspx

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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A purchaser is responsible for payment of transfer cost when acquiring an immovable property, but it should further be established if the transaction is subject to the payment of VAT or transfer duty to SARS.

When an immovable property is transferred, either VAT or transfer duty is payable. To determine whether VAT or transfer duty is payable one should look at the status of the seller and the type of transaction.

VAT
If the seller is registered for VAT (Vendor) and he sells the property in the course of his business, VAT will be payable to SARS. A vendor is a person who runs a business and whose total taxable earnings per year exceed R1 000 000. He will then have to be registered for VAT. A further stipulation is that the property that is being sold must be related to his business from which he derives an income.

The Offer to Purchase should stipulate whether the purchase price includes or excludes VAT. If the Offer to Purchase makes no mention of the payment of VAT and the seller is a VAT vendor, it is then deemed that VAT is included and the seller will have to pay 14% of the purchase price to SARS. It is the seller’s responsibility to pay the VAT to SARS, except if the contract stipulates otherwise.

When a seller is not registered for VAT, but the purchaser is a registered VAT vendor, the purchaser will still pay transfer duty but can claim the transfer duty back from SARS after registration of the property.

Transfer duty
When the seller is not a registered VAT vendor it is almost certain that transfer duty will be payable on the transaction. A purchaser is responsible for payment of the transfer duty. Transfer duty is currently payable on the following scale:

1. The first R600 000 of the value is exempted from transfer duty.
2. Thereafter transfer duty is levied at 3% of the value up to R1 000 000.
3. From R1 000 001 to R1 500 000, transfer duty will be R12 000 plus 5% on the value above R1 000 000.
4. On R1 500 001 and above transfer duty is R37 000 plus 8% on the value above R1 500 000.

Transfer duty payable by an individual or a legal entity (trust, company or close corporation) is currently charged at the same rate.

Transfer duty is levied on the reasonable value of the property, which will normally be the purchase price, but should the market value be higher than the purchase price, transfer duty will be payable on the highest amount. Transfer duty is payable within six months from the date that the Offer to Purchase was signed.

In instances where a party obtains a property as an inheritance or as the beneficiary of a divorce settlement, the transaction will be exempted from payment of transfer duty.

Where shares in a company or a member’s interest in a close corporation or rights in a trust are transferred, the transaction will be subject to payment of transfer duty if the legal entity is the owner of a residential property.

Zero-rated transactions
This means that VAT will be payable on the transaction but at a zero rate. If both the seller and the purchaser are registered for VAT and the property is sold as a going concern, VAT will be charged at a zero rate, for instance when a farmer sells his farm as well as the cattle and the implements.

Exemption
Transfer duty, and not VAT, will be payable when a seller who is registered for VAT sells a property that was leased for residential purposes.

It is thus important for a purchaser to establish the status of the seller when buying a property. The seller who is registered for VAT should carefully peruse the purchase price clause in a contract before signing, to establish if VAT is included or excluded.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.

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Vir enige besigheid wat in Suid-Afrika sake doen, is dit ‘n uitdaging om op die hoogte te bly van alle vereiste registrasies en nakoming wat deur wetgewing en ander regulering voorgeskryf word. Hier volg ‘n opsomming van die mees algemene registrasies en nakoming wat op die meeste besighede van toepassing is.

1. Jaarlikse opgawes en jaargelde (Maatskappye): Enige maatskappy wat by die CIPC geregistreer wil bly, moet jaarliks gedurende die maatskappy se verjaardagmaand ‘n opgawe van inligting by die CIPC indien en ook die gepaardgaande jaargeld betaal. (www.cipc.co.za)

2. Inkomstebelasting: Enige onderneming wat handel dryf moet by die Suid-Afrikaanse Inkomstediens (SAID) as ‘n belastingbetaler registreer, hetsy as individu/eenmansaak, maatskappy, trust, of enige ander persoon. Jaarliks moet hierdie onderneming ‘n inkomstebelastingopgawe (IB12 of IB14) voltooi en indien. Verder moet daar elke ses maande voorlopige belasting bereken en ‘n opgawe (IRP6) ingedien word, en indien nodig, moet enige verskuldigde bedrag ook betaal word. Nie-nakoming kan aansienlike boetes tot gevolg hê. (www.sars.gov.za)

3. Belasting op Toegevoegde Waarde (BTW): Indien die jaarlikse omset van die onderneming R1 miljoen sal oorskry, moet die onderneming vir BTW registreer. ‘n Vrywillige registrasie kan gedoen word indien die omset meer as R50 000 per jaar sal wees. BTW-opgawes moet gewoonlik elke twee maande ingedien word en, indien nodig, moet enige verskuldigde bedrag ook betaal word. (www.sars.gov.za)

4. Werkloosheidsversekering: Indien ‘n onderneming werknemers in diens het, moet die onderneming as werkgewer vir werkloosheidsversekering registreer. Maandelikse opgawes vir betaling moet ingedien word. ‘n Bedrag gelykstaande aan een persent van die salarisse van werknemers is deur die werkgewer betaalbaar, en ‘n verdere een persent deur die werknemer. (www.labour.gov.za)

5. Werknemersbelasting: Indien enige van die werknemers van ‘n onderneming se vergoeding die perk in die Belastingwet oorskry, moet die onderneming as werkgewer vir LBS (lopende betaalstelsel) registreer. Die belasting moet maandeliks van sodanige werknemers se vergoeding afgetrek word en aan die SAID oorbetaal word tesame met die indiening van die nodige opgawes. Daar moet ook twee keer per jaar ‘n LBS-rekonsiliasie (IRP501) opgestel en by die SAID ingedien word. Jaarliks moet daar saam met die LBS-rekonsiliasie ook IRP5-sertifikate vir alle werknemers uitgemaak word. (www.sars.gov.za)

6. Vaardigheidsontwikkelingsheffing: Indien die totale jaarlikse salarisrekening van die onderneming R500 000 oorskry, of indien die onderneming meer as 50 werknemers het, moet die onderneming ook vir die vaardigheidsontwikkelingsheffing (SDL) registreer, en moet daar ook maandeliks opgawes ingedien en die nodige heffing betaal word. (www.labour.gov.za / www.sars.gov.za)

7. Vergoedingskommissaris: Enige onderneming wat werknemers in diens het, ongeag die vergoeding wat vir sodanige werknemers betaal word, moet as werkgewer vir ongevalleversekering by die Departement van Arbeid registreer. Die onderneming moet jaarliks ‘n opgawe by die departement indien en word dan aangeslaan teen ‘n persentasie van die totale salarisrekening van die onderneming. Werknemers wat aan diens beseer word, kan dan vergoeding van hierdie fonds eis. (www.labour.gov.za)

8. Gelyke Indiensneming: ‘n Onderneming wat meer as 50 werknemers in diens het, of wat die gestelde drempel van jaarlikse omset vir die spesifieke sektor waarin dit handel dryf, oorskry, moet elke twee jaar ‘n gelyke indiensnemingsplan opstel en by die Departement van Arbeid indien. (www.labour.gov.za)

Hierdie is ‘n algemene inligtingstuk en moet gevolglik nie as regs- of ander professionele advies benut word nie. Geen aanspreeklikheid kan aanvaar word vir enige foute of weglatings of enige skade of verlies wat volg uit die gebruik van enige inligting hierin vervat nie. Kontak altyd u regsadviseur vir spesifieke en toegepaste advies.

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