11 Aug In Tax
Do I need to pay tax on assets, donations or inheritance money?
Key terms of an inheritance . . .
When a person (taxpayer) dies, that person is called a ‘deceased person’ and all his or her assets on the date of death will be placed in an estate. This estate is called an estate of a deceased person (commonly known as a ‘deceased estate’).
Assets in a deceased estate can among other things include immovable property (e.g. a house), movable property (e.g. a car, furniture, etc), or cash in the bank.
Once the executor has finalised all the administration in the deceased estate, the remaining assets (after paying all the debts) will be distributed to the beneficiaries.
Do I need to pay tax on assets or money I inherited?
No, an asset inherited is a ‘capital receipt’ and is therefore not included in the taxpayer’s gross income.
Therefore, in South Africa, there is no tax payable by a person who receives an inheritance. Capital Gains Tax (CGT) is also not payable by the recipient of an inheritance.
Are donations or gifts different from an inheritance?
Yes, for tax purposes, donations and gifts are treated differently.
Donations are subject to Donations Tax of 20% on the first R30 million of donations made during a tax year. Donations exceeding R30 million, at the rate of 25%.
An annual exemption of up to R100 000 of the value of all donations made during the tax year. For example, if a once-off donation of R80 000 is made by an individual, no tax is payable.
If a donation of R140,000 is made, then Donations Tax of R8 000 is payable (20% of the amount exceeding R100 000, which is R40 000).
Please contact us on email@example.com with any questions you may have.
This post was updated on the 12th August 2020