Module 14:
Estate Duty
2025 Solutions to Lecture Examples
Presented by:
Phatsimo Moroeng
Office: FFA1
Email: [Link]@[Link]
© University of the Witwatersrand
Section 3(3) - Deemed property
SOLUTION
Item ZAR
Policy A: included, as the policy was not ceded to the spouse in the ante-nuptial 100 000
contract (note 1)
Policy B: taken out by partner – exempt (proviso (iA) of s 3(3)(a)) NIL
Policy C: amount paid to Tina less premiums and interest (note 2) (R60 000 – 49 500
(R10 000 + R500))
Policy D: not exempt (note 3) 345 000
Notes:
Note 1 - Premiums paid by the deceased are not deductible. The R100 000 will qualify for
the s 4(q) deduction.
Note 2 - This policy is not exempt, as the proceeds are paid out to a relative of the deceased
(his sister).
Note 3 - Proceeds used for the benefit of a relative of Grace – the proceeds less premiums
and interest paid by beneficiary (R400 000 – R55 000) will be included in deemed property.
© School of Accountancy, University of the
Witwatersrand
Section 3(3) - Deemed property
SOLUTION
Alt calc: (4-2) = 2, 2/2 =1
Mr B (the deceased) had the smaller accrual, their estate has an
accrual claim of R1 million against the estate of Mrs B (surviving
spouse). This claim is included in deemed property after Mr B’s
death.
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Witwatersrand
Section 5 - Valuation of property
Bare Dominium (section 5(1)(f)):
SOLUTION
Fair market value of the property :R500 000
Value of the usufructuary interest: = R410 497
Value of bare dominium is therefore R89 503 (R500 000 – R410 497)
© School of Accountancy, University of the
Witwatersrand
Section 4 – Deductions
EXAMPLE & SOLUTION
Example adapted from: SILKE: South African Income Tax – 2024 – M Stiglingh - page 1068
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Witwatersrand
Section 4A - Abatement
SOLUTION
Sakhile
Sakhile’s net estate is entitled to R500 000 of the R3 500 000
abatement. This means that R750 000 of the abatement could be
transferred to each of Koketso, Karabo, Maria and Mirenda’s
estates (R3 500 000 – R500 000)/4).
Koketso
Koketso’s estate is entitled to an abatement of R4 250 000
(R3 500 000 plus R750 000 transferred from Sakhile’s estate)
© School of Accountancy, University of the
Witwatersrand
Section 4A - Abatement
SOLUTION
Net value of Mr X’s estate 16 000 000
Abatement (s 4A) 7 000 000
Abatement (s 4A) R3.5M x 2 as there is a 7 000 000
predeceased spouse.
Less: Abatement used by predeceased (0)
spouse
(CHOOSE most beneficial deceased spouse
– lower of R0 used by A OR R1.5m used by
B)
Dutiable amount of estate 9 000 000
Estate duty @ 20% 1 800 000
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Witwatersrand
Section 16 - Applicable rebates
The rebate for foreign death duties may not exceed the estate duty
imposed on the property in South Africa.
For example, if foreign death duties on foreign property amounted to R20
000, while the estate duty in South Africa relating to that property
amounted to R18 000, the rebate is limited to R18 000.
If the estate duty in South Africa relating to that property amounted to R22
000, the rebate would be limited to R20 000.
South African estate duty on foreign assets (subject to foreign death
duties) = (Value of foreign asset/Net value of estate) x estate duty
payable by deceased.
The rebate will be the lower of the SA estate duty (determined from the
calculation above) and the foreign death duties (which will be given).
© School of Accountancy, University of the
Witwatersrand