Page 58 - Nexia SAB&T Estate Planning Guide 2024

Capital gains tax and liquidity
n In order to prevent liquidity problems caused by excessive capital gains tax:
u Where the capital gains tax liability exceeds 50% of the net value of the
estate (before taking capital gains tax into account), and
u The executor is required to dispose of an asset to pay the capital gains
tax,
n The heir can elect to accept the asset and the liability for the excess over
50% of that net value, the liability plus interest will have to be paid by the
heir within three years.
Capital gains tax and estate planning
n The estate planner needs to evaluate the impact of capital gains tax on his
estate plan.
n Capital gains tax may place a burden on the liquidity of an estate.
n A carefully structured Will could go a long way in minimising the capital
gains tax effects in the estate itself, as there is no exclusion available to the
deceased estate.
n When considering whether to transfer a primary residence out of a legal
entity into an estate planner’s personal name, evaluate the full tax liabilities
for both forms- in many cases, the capital gains tax liability is less than the
combined effect of executors fees and estate duties.

TRANSFER DUTY

n Transfer duty is an indirect tax on the acquisition of immovable property
situated in South Africa. The following are the main provisions:
u It is calculated on the value of the immovable property (purchase price or
market value whichever is the highest).
u It is payable within six months after the transaction is entered into.
u Where a registered VAT vendor purchases property from a non-vendor, the
notional input tax is calculated by multiplying the tax fraction [15/115
(14/114 before 1 April 2018)] by the lesser of the consideration paid or
market value.

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