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Income Tax Act, 1962 (Act 58 of 1962)

Chapter II: The Taxes

Part I: Normal Tax

25. Taxation of deceased estates

 

(1) Any—
(a) income received by or accrued to or in favour of any person in his or her capacity as the executor of the estate of a deceased person; and
(b) amount received or accrued as contemplated in paragraph (a) which would have been income in the hands of that deceased person had that amount been received by or accrued to or in favour of that deceased person during his or her lifetime,

must be treated as income of the deceased estate of that deceased person.

 

(2) Where the deceased estate of a person acquires an asset from that person, that deceased estate must, if that asset is an asset—
(a) other than an asset contemplated in section 9HA(2), be treated as having acquired that asset for an amount of expenditure incurred equal to the amount contemplated in section 9HA(1); and

[Subsection (2)(a) substituted by section 47(1)(a) of the Taxation Laws Amendment Act, 2016 (Act No. 15 of 2016 - effective 1 March 2016]

(b) contemplated in section 9HA(2), be treated as having acquired that asset for an amount of expenditure incurred equal to the amount contemplated in section 9HA(2)(b).

 

(3) Where the deceased estate of a person disposes of an asset to an heir or legatee of that person—
(a) that deceased estate must be treated as having disposed of that asset for an amount received or accrued equal to the amount of expenditure incurred by the deceased estate in respect of that asset; and
(b) the heir or legatee must be treated as having acquired that asset for an amount of expenditure incurred equal to the expenditure incurred by the deceased estate in respect of that asset.

 

(4)
(a) This subsection must be applied in respect of an asset acquired by a surviving spouse of a deceased person as contemplated in section 9HA(2) for purposes of determining the amount of any—
(i) allowance or deduction to which that spouse may be entitled or that is to be recovered or recouped by or included in the income of that spouse in respect of that asset; or
(ii) the amount of any capital gain or capital loss in respect of a disposal of that asset by that spouse.
(b) The surviving spouse contemplated in paragraph (a) must be treated as one and the same person as the deceased person and deceased estate with respect to—
(i) the date of acquisition of that asset by that deceased person;
(ii) any valuation of that asset effected by that deceased person as contemplated in paragraph 29(4) of the Eighth Schedule;
(iii) the amount of any expenditure and the date on which and the currency in which that expenditure was incurred in respect of that asset—
(aa) by that deceased person as contemplated in section 9HA(2)(b); and
(bb) by that deceased estate, other than the expenditure contemplated in section 9HA(2)(b);
(iv) the manner in which that asset had been used by the deceased person and the deceased estate; and
(v) any allowance or deduction allowable in respect of that asset to the deceased person and the deceased estate.

[Subsection (4) substituted by section 47(1)(b) of the Taxation Laws Amendment Act, 2016 (Act No. 15 of 2016) - effective 1 March 2016]

 

(5) A deceased estate must, other than for the purposes of section 6, section 6A and section 6B, be treated as if that estate were a natural person.

 

(6) Where—
(a) the tax determined in terms of this Act, which relates to the taxable capital gain derived by a deceased person from assets disposed of by that person as contemplated in section 9HA, exceeds 50 per cent of the net value of the estate of that person, as determined in terms of section 4 of the Estate Duty Act for purposes of that Act, before taking into account the amount of that tax so determined; and
(b) the executor of the estate is required to dispose of any asset of the estate for purposes of paying the amount of the tax contemplated in paragraph (a),

any heir or legatee of the estate who would have been entitled to that asset contemplated in paragraph (b) had there been no liability for tax, may elect that that asset be distributed to that heir or legatee if the amount of tax which exceeds 50 per cent of that net value be paid by that heir or legatee within a period of three years after the date that the estate has become distributable in terms of section 35(12) of the Administration of Estates Act, 1965 (Act No. 66 of 1965).

 

(7) Any amount of tax payable by an heir or legatee as contemplated in subsection (6), becomes a debt due to the state and must be treated as an amount of tax chargeable in terms of this Act which is due by that person.

 

[Section 25 substituted by section 48(1) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]