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DEATH AND TAXES

Income Tax: General
n When a person dies, his executor is appointed as a representative taxpayer
of the estate, and he must handle the tax affairs of both the deceased
individual taxpayer, to date of death, as well as that of the deceased estate
(post death).
n The executor is required to ensure that the deceased estate is registered
for income tax separately to that of the deceased individual. The deceased
estate receives its own tax reference number, and is assessed at rates
applicable to individuals, except that it will not qualify for any of the personal
rebates.
n The executor is required to ensure that the deceased’s final income tax return
n and the return(s) for the deceased estate are submitted to the South African
Revenue Service.
n There are therefore two types of assessments that must be taken into
account, namely:
u the pre-death assessment (assessing the income and deductions
applicable to the taxpayer to date of death), and
u the post-death assessment (assessing the income and deductions
applicable to the deceased estate after date of death).

Specific Income Tax Considerations
n The provisions of Section 25 of the Income Tax Act (no.58 of 1962) were
amended, with effect from 1 March 2016, and apply to persons dying on or
after that date.
n The amended provisions state that any income received or accrued to the
deceased estate post death, which would have been income in the hands of
the deceased, had he received it before he died, must be treated as income
of the deceased estate regardless of who inherits the income (previously
such income was taxed in the beneficiary’s hands). The deceased estate
therefore is required to account for all its income until the Liquidation and
Distribution account is finalised. The deceased estate will qualify for the
annual interest exemption.

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