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Income Tax Act, 1962 (Act 58 of 1962)

Chapter II: The Taxes

Part I: Normal Tax

9HA. Disposal by deceased person

 

(1) A deceased person must be treated as having disposed of his or her assets, other than—
(a) assets disposed of to his or her surviving spouse as contemplated in subsection (2);
(b) a long-term insurance policy of the deceased, if any capital gain or capital loss that would have been determined in respect of a disposal that resulted in proceeds of that policy being received by or accruing to the deceased would have been disregarded in terms of paragraph 55 of the Eighth Schedule; or
(c) an interest of the deceased in—
(i) a pension, pension preservation, provident, provident preservation or retirement annuity fund in the Republic; or
(ii) a fund, arrangement or instrument situated outside the Republic which provides benefits similar to a pension, pension preservation, provident, provident preservation or retirement annuity fund,

if any capital gain or capital loss that would have been determined in respect of a disposal of that interest that resulted in a lump sum benefit being received by or accruing to the deceased would have been disregarded in terms of paragraph 54 of the Eighth Schedule, at the date of that person’s death for an amount received or accrued equal to the market value as contemplated in paragraph 31 of the Eighth Schedule of those assets as at that date.

[Subsection (1) commenced 1 March 2016 in terms of section 20(2) of the Taxation Laws Amendment Act, 2016 (Act No. 15 of 2016)]

 

(2) A deceased person must, if his or her surviving spouse is a resident, be treated—
(a) as having disposed of an asset for the benefit of that surviving spouse if that asset is acquired by that surviving spouse—

[Words preceding subsection (2)(a)(i) substituted by section 22(1)(a) of the Taxation Laws Administration Act, 2016 (Act No. 15 of 2016)]

(i) by ab intestato or testamentary succession;
(ii) as a result of a redistribution agreement between the heirs and legatees of that person in the course of liquidation or distribution of the deceased estate of that person; or
(iii) in settlement of a claim arising under section 3 of the Matrimonial Property Act, 1984 (Act No. 88 of 1984); and
(b) as having disposed of that asset for an amount received or accrued that is equal to, in the case of—
(i) trading stock, or livestock or produce contemplated in the First Schedule, the amount that was allowed as a deduction in respect of that asset for purposes of determining that person’s taxable income, before the inclusion of any taxable capital gain, for the year of assessment ending on the date of that person’s death; or
(ii) any other asset, the base cost of that asset, as contemplated in the Eighth Schedule, as at the date of that person’s death.

[Subsection (2)(b) substituted by section 20(1)(b) of the Taxation Laws Administration Act, 2016 (Act No. 15 of 2016)]

 

(3) If any asset that is treated as having been disposed of by a deceased person as contemplated in subsection (1) is transferred directly to an heir or legatee of that person, that heir or legatee must be treated as having acquired that asset for an amount of expenditure incurred equal to the market value as contemplated in paragraph 31 of the Eighth Schedule of that asset as at the date of that deceased person’s death.

 

[Section 9HA inserted by section 15(1) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]