Page 54 - Profmark_Estate_Planning_Guide_2025

Inclusion rate
n A person’s taxable capital gain for the year of assessment is calculated as
a percentage of the net capital gain for the year. For normal tax purposes,
the taxable capital gain is then added to taxable income before deducting
donations.
n The percentage used to calculate the taxable gain (for the 2026 year of
assessment) is:
u 40% for individuals (which includes deceased estates), and special
trusts;
u 80% for companies, close corporations, and ordinary trusts.
Annual exclusion
n The annual exclusion in the year in which a person dies is R300,000.
n R40,000 is allowed as an annual exclusion in the case of a living person.
n Since it is deemed that the deceased disposed if all of his assets on the day
of death, the higher exclusion is intended to grant some relief in the year
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.

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