You may have heard that the estate duty rate and donations tax rate have been increased with effect from 1 March 2018. This is in line with Davis Tax Committee recommendations.
For estates of which the dutiable amount is more than R30 million, estate duty is levied at 20% on the first R30 million and 25% on the dutiable amount above R30 million. For estates up to R30 million, the rate of 20% remains the same. The R3,5 million basic deduction and the other deductions for bequests to charitable institutions and surviving spouses, remains the same. The roll-over of the R3,5 million basic deduction to the estate of a surviving spouse, if not deducted in the estate of the predeceased spouse, also remains the same.
Furthermore, any donations exceeding R30 million per tax year, will be taxed at 25% on the amount exceeding R30 million in that tax year, in order to limit the staggering of donations to avoid the higher estate duty rate. All donations up to R30 million, will be taxed at 20%. The exemption of R100 000 per tax year for natural persons remains the same.
No changes were made to Tax on Capital Gains and the rules regarding Trusts.
Should you have any questions about how these changes to the applicable tax rates impact on your estate and existing Will, please contact our Estate and Trust Department.