3 crucial taxes affecting your estate plan in South Africa

INTEGRATING tax planning into your estate strategy is essential to ensure your legacy is preserved and your heirs are protected. Without a clear understanding of how tax applies after death, your estate could face administrative delays, unexpected liabilities, and erosion of value. Here are three critical taxes to consider in your estate plan:

- ALEX ODENDAAL

1. Final income tax: Sars has the first claim

When you die, your tax obligations don't die with you. Sars has the first legal claim on your estate, and your executor becomes responsible for ensuring that all outstanding tax returns are submitted. This includes obtaining tax certificates and IRP5s from financial institutions and settling any unpaid taxes. Since 2016, two income tax assessments have been required:

• A pre-date of death return, covering income earned and deductions up to the date of death.

• A post-date of death return, covering income such as dividends, rental income, and interest earned during the estate administration period, until the Master accepts the liquidation and distribution account (usually after the Section 35 advertisement expires).

2. Capital gains tax: Death is a deemed disposal event