Page 55 - Nexia SAB&T Estate Planning Guide 2024

concerned. This once-off exclusion of R300 000 in the year of death will
therefore apply on death, and any amount thereafter will have an inclusion
rate of 40% subject to tax as per the deceased’s marginal tax rate.
Capital gains tax and death
n In terms of Section 9HA and revised Section 25 of the Income Tax Act, a
person is treated as having disposed of his or her assets at his date of death
for an amount received or accrued equal to the market value as prescribed,
given the following exclusions:
u Assets for personal use (with certain exceptions)
u The proceeds from life assurance policies
u Interests in pension, provident or retirement annuity funds
u The first R2 million in respect of a primary residence
u Small business assets with capital gains up to R1.8 million (applicable
when a person is over the age of 55 where the maximum market value of
the small business assets does not exceed R10 million).
Assets that have been bequeathed to a surviving spouse are subject to a “roll-over”,
whereby the CGT liability is postponed until the surviving spouse’s death.
Capital gains tax and the deceased
n At death, capital gains tax is activated through a deemed disposal whereby
the deceased is deemed to have disposed of all his assets to his estate, at
market value at the time of death.
n Assets bequeathed to a surviving spouse do not incur capital gains tax as
they are subject to roll-over relief.
n The R300,000 exemption will apply to disposals made to the deceased
estate.
n The exclusion for primary residence may apply.
n Therefore, where an estate consists of a primary residence, and personal use
assets, no capital gains tax may be payable.
n Under most circumstances, although capital gains tax may be paid at the
death of the deceased, no further capital gains tax will be payable when an
heir, legatee or trustee receives an asset from the deceased estate.

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