EDUCATIONAL SERIES

SARS and the Deceased’s Taxes

Estate Duty, Capital Gains Tax, and Income Tax After Death
Infosheet 10 of 28

Many families assume that once someone passes away, their tax affairs are done. In reality, death triggers a set of tax obligations that must be finalised before the estate can be closed.

The executor becomes responsible for the deceased’s tax profile from the date of death. That means ensuring all outstanding tax returns are filed, income earned after death is accounted for, and SARS issues a formal tax clearance — known as a DEC letter — before the Master will close the estate. Depending on the size and nature of the estate, Capital Gains Tax and Estate Duty may also apply.

Tax is one of the areas where delays are most commonly experienced, and where the consequences of getting it wrong can be significant. This infosheet explains the tax obligations that arise in a deceased estate, in plain language, so you know what to expect and can work effectively with whoever is handling the estate’s tax affairs.

1 Income Tax Before Death

Without these documents, finalisation with SARS is delayed — which delays the entire estate.

  • The executor takes over the tax profile of the deceased and submits all outstanding returns prior to the date of death.
  • Important documents needed: all SARS returns and assessments, IRP5s, IT3s (interest certificates), and all income earned.
2 Income Tax After Death
  • A tax profile is registered in the name of the estate.
  • The executor files a final tax return for the deceased.
  • Income earned after death is taxed in the estate.
  • SARS must issue a tax clearance (known as a DEC letter) before the estate is finalised.
  • This clearance can take up to 6-12 months due to SARS backlogs.
3 Capital Gains Tax (CGT)

CGT may apply when:

The deceased is treated as having disposed of all assets at death. Primary residence exclusions may apply. Rollover relief applies for spouses.

  • Property is sold that is not the deceased’s primary residence
  • Shares or investments are disposed of
  • Certain assets are transferred
4 Estate Duty

Estate duty is a tax on the net value of the estate.

  • First R3.5 million is exempt (abatement)
  • Anything above may be taxed at 20% or 25% depending on the value
  • Bequests to spouses are generally exempt, but taken into account in the spouse’s estate when they pass away.
5 Why Tax Clearance Is Essential
  • SARS must confirm all taxes are paid
  • The Master will not close the estate without clearance
  • Prevents future liability for the executor

A Note From Our Practice

Losing someone you love is hard enough. The legal process of winding up their estate should not be a source of additional confusion or anxiety. But for most families, it is.

Estate administration in South Africa is a structured legal process governed by the Administration of Estates Act and a range of other legislation. It involves the Master of the High Court, SARS, financial institutions, the Deeds Office, and more. It takes time. It requires documents. And it can feel, at every turn, like a system that expects you to already know how it works.
We created this educational series because we believe informed families make better decisions and because the questions we are asked most often are the same ones that could be answered before a client ever walks through our door.

The CDT Educational Series consists of 28 infosheets covering the full spectrum of deceased estate administration, from the first 72 hours after a death to the final distribution of assets. Each infosheet is written in plain language, without jargon, and is designed to give you a clear picture of what the process involves and why each step exists.

Important: These infosheets are educational resources. They provide general information about the estate administration process in South Africa and are not intended as legal advice. Every estate has its own facts, complexities, and circumstances. Nothing in this series should be relied upon as a substitute for professional legal guidance specific to your matter.

Our intention is simple: to help you understand the landscape, ask the right questions, and feel confident when you come to us for help. Because when you are ready, we are here.

Cari du Toit & Aqeela Peters

Directors
Cari du Toit Incorporated Attorneys & Conveyancers