Page 54 - Nexia SAB&T Estate Planning Guide 2024

n A capital gain or loss is determined by calculating the difference between
the proceeds i.e. the amount accruing to the seller and the base cost of the
disposed asset.
n Base cost relates to the costs directly incurred in acquiring or improving the
asset.
n The Income Tax Act has set out certain valuation rules and methods of
calculation of the base cost. Due to limitations in scope of this guide, a
comprehensive discussion on all aspects of capital gains tax, including
valuation rules, is not possible, and the estate planner is advised to consult
with his adviser for more detail.
n Certain assets are excluded, such as personal use assets (see below for list
of assets excluded from a deceased estate).
n The first R2 million of the capital gain or loss incurred on the disposal of
a primary residence is excluded from capital gains tax (applies to a South
African resident and a natural person or Special Trust Type A, which owns
property as a primary residence).
n Once the taxable capital gain is calculated, it is included in taxable income
and taxed at normal income tax rates applicable.
Inclusion rate
n A person’s taxable capital gain for the year of assessment is calculated as
a percentage of the net capital gain for the year. For normal tax purposes,
the taxable capital gain is then added to taxable income before deducting
donations.
n The percentage used to calculate the taxable gain (for the 2025 year of
assessment) is:
u 40% for individuals (which includes deceased estates), and special
trusts;
u 80% for companies, close corporations, and ordinary trusts.

Annual exclusion
n The annual exclusion in the year in which a person dies is R300,000.
n R40,000 is allowed as an annual exclusion in the case of a living person.
n Since it is deemed that the deceased disposed if all of his assets on the day
of death, the higher exclusion is intended to grant some relief in the year

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