How estate duty is calculated
Net value = gross estate (incl. deemed property) − liabilities − costs − bequests to spouse − bequests to PBOs − other deductions Dutiable amount = net value − R3 500 000 abatement (plus any ported unused abatement) Estate duty = 20% × dutiable amount up to R30 million + 25% × dutiable amount above R30 million
Planning points
- Estate duty is only one cost: executor fees, Master’s fees, conveyancing and capital gains tax also reduce what heirs receive.
- Make sure the estate has enough cash (or life cover) to pay duty and costs without forcing the sale of assets.
- A valid, up-to-date will is the best way to make sure your estate goes where you intend.
Worked examples
R12 million estate, nothing left to a spouse
Net value is R10.1 million. After the R3.5 million abatement, R6.6 million is dutiable at 20% — estate duty of R1.32 million.
Calculation
- Gross value of the estate
- R12 000 000.00
- Less liabilities and costs
- −R1 900 000.00
- Net value
- R10 100 000.00
- Less abatement (s4A) Official
- −R3 500 000.00
- Dutiable amount
- R6 600 000.00
- Duty at 20% up to R30 million
- R1 320 000.00
- Estate duty
- R1 320 000.00
- Estimated value passing to heirs after duty
- R8 780 000.00
The same estate left to a surviving spouse
Property left to a spouse is fully deductible, so no estate duty is payable in the first-dying spouse’s estate.
Calculation
- Gross value of the estate
- R12 000 000.00
- Less liabilities and costs
- −R1 900 000.00
- Less bequests to spouse (s4(q))
- −R10 100 000.00
- Net value
- R0.00
- Less abatement (s4A) Official
- −R3 500 000.00
- Dutiable amount
- R0.00
- Duty at 20% up to R30 million
- R0.00
- Estate duty
- R0.00
- Estimated value passing to heirs after duty
- R10 100 000.00
Frequently asked questions
What is the estate duty rate in South Africa?
20% on the first R30 million of the dutiable amount and 25% on the amount above R30 million, for deaths on or after 1 March 2018.
What is the estate duty abatement?
Every estate gets a R3.5 million deduction (section 4A). Any unused portion in a first-dying spouse’s estate can be used by the surviving spouse’s estate, up to a combined R7 million.
Is property left to my spouse taxed?
No. Property that passes to a surviving spouse is deductible in full (section 4(q)), so it is not subject to estate duty in the first estate — but it may be in the surviving spouse’s estate later.
Are life insurance policies included?
Policies on the deceased’s life are generally deemed property of the estate, with some exceptions — for example policies payable to a spouse under an antenuptial or divorce settlement, or certain business-assurance policies.
Is estate duty the same as capital gains tax?
No. Death is a capital gains tax event — the deceased is treated as having disposed of assets at market value — and CGT is assessed separately in the final income tax return.