Estate duty is levied on what is termed the ‘‘dutiable amount’’ of an estate. Estate duty can have far reaching consequences for you or your loved ones as they find themselves forking out unnecessary funds which could have been avoided by seeking estate planning assistance. This article aims to provide you with a basic understanding as to the meaning of estate duty and how it is calculated concisely.

Before we can calculate the duty, one needs to establish what the gross value of an estate is in terms of section 3 of the Estate Duty Act 45 of 1955 (EDA), and then deduct from the aforesaid, certain allowable deductions in terms of section 4 of the EDA, at which point one will arrive at the net value of the estate where one can apply the Section 4A rebate of R3,5 million (the primary rebate).

Gross Value of the Estate:

Basically, gross value comprises all property of the deceased, as at date of death and all property which is deemed to be property of the deceased at that date.

Net Value of Estate:

All allowable deductions in terms of section 4 of the EDA from the gross value of the Estate.

List of some of the allowable deductions:

  • Fair and reasonable cost of funeral, tombstone and death-bed expenses
  • Debts due by the deceased to ordinary residents within South Africa
  • Certain permissible foreign assets
  • Bequest to public benefit organisation
  • Value of an accrual claim which a surviving spouse has against the deceased
  • Whatever accrues to the surviving spouse as a result of the death of the deceased

Section 4A rebate:

Currently, this amount is fixed at R3,5 million, however one can increase this amount by deferring the primary rebate in certain circumstances.

The aforesaid involves a step by step investigation into a deceased person’s personal life and financial position. It can become multifaceted which is why guidance is needed to ensure that the estate is administered correctly.

Come and speak to us should you require assistance in the administration of a deceased estate. Your trusted legal partner.