Inheritance and Estate Tax in South Africa

What taxes apply when someone dies in South Africa?

South Africa does not impose a separate inheritance tax on beneficiaries. An heir who receives assets from a deceased estate pays no personal tax on that receipt: SARS treats an inherited asset as a capital receipt excluded from gross income, and capital gains tax (CGT) does not arise in the hands of the recipient [SC1]. The taxes that do apply fall on the estate itself and on the deceased person's final income tax return. The three overlapping charges are estate duty on the estate's dutiable value, CGT on the deemed disposal of all assets at the date of death, and potentially donations tax on lifetime gifts made before death.

What is estate duty and who pays it?

Estate duty is levied under the Estate Duty Act 45 of 1955. It is charged on the dutiable value of the deceased's estate, calculated as the net value of all property (and deemed property) less the allowable deductions and the ZAR 3.5 million abatement [SC1]. The executor of the estate is responsible for calculating and paying the duty. Beneficiaries receive their inheritances after all debts, administration costs, and estate duty have been settled.

The rates for deaths on or after 1 March 2018 are:

• 20% on the dutiable estate up to ZAR 30 million
• 25% on any dutiable amount above ZAR 30 million

These rates were confirmed unchanged in the February 2026 Budget [SC2]. The abatement of ZAR 3.5 million has also remained at that level since 2010.

For a larger estate of ZAR 50 million the calculation splits at the R30 million threshold: the first ZAR 26.5 million of dutiable amount (after the R3.5M abatement, up to R30M) is taxed at 20% (ZAR 5,300,000) and the remaining ZAR 20 million above R30M is taxed at 25% (ZAR 5,000,000), giving total estate duty of ZAR 10,300,000.

How does the ZAR 3.5 million abatement work, and can spouses combine it?

Section 4A of the Estate Duty Act grants every estate a ZAR 3.5 million abatement deducted from the net estate value before the duty rate is applied. Estates whose dutiable amount falls at or below zero (net value at most ZAR 3.5 million) owe no estate duty at all [SC1].

Where the first-dying spouse leaves all assets to the surviving spouse and the Section 4A abatement goes unused on that first death, Section 4A(2) allows the surviving spouse's executor to claim the deceased spouse's unused abatement in addition to the survivor's own ZAR 3.5 million, producing a combined abatement of up to ZAR 7 million on the second death [SC3]. This portability feature, effective since 1 January 2010, applies only to the extent the abatement was actually unused. The executor of the first estate must submit the estate duty return to document the unused balance.

What is the Section 4(q) spouse exemption?

Section 4(q) of the Estate Duty Act allows a full deduction from the dutiable estate for any property that passes to a surviving spouse [SC1]. The deduction is unlimited in value: assets of any amount bequeathed directly to a surviving resident spouse are removed from the duty calculation entirely, deferring estate duty to the survivor's death. The exemption covers spouses under civil marriages, civil unions registered under the Civil Union Act 17 of 2006, customary marriages recognised under the Recognition of Customary Marriages Act 120 of 1998, and unions under religious rites recognised as marriages under South African law.

Important restriction: where the will routes assets into a discretionary trust for the surviving spouse's benefit and the trustee has discretion to allocate trust assets or income to persons other than the surviving spouse, the Section 4(q) deduction is not available for those assets. A vested trust (no trustee discretion on income or capital) does qualify [SC4].

The practical result for a married couple is that no estate duty is payable on the first death if everything passes to the surviving spouse, and the second estate can claim the combined ZAR 7 million abatement.

How does capital gains tax apply at death?

Paragraph 40 of the Eighth Schedule to the Income Tax Act 58 of 1962 deems a deceased person to have disposed of all assets at market value on the date of death. This triggers CGT in the deceased's final income tax return. The 2026 Budget increased the CGT exclusion applicable in the year of death from ZAR 300,000 to ZAR 440,000 (effective for deaths on or after 1 March 2026), offering greater relief from the deemed disposal charge [SC2]. The annual CGT exclusion for living taxpayers was separately increased from ZAR 40,000 to ZAR 50,000 in the same Budget.

For individuals the inclusion rate remains 40%, so only 40% of the net capital gain is added to taxable income. At the maximum marginal income tax rate of 45% the effective CGT rate is 18%. The CGT liability that arises from the deemed disposal becomes a debt of the estate and is deductible when calculating the net value of the estate for estate duty purposes, though a lower CGT liability correspondingly reduces that estate duty deduction [SC2].

Where assets are bequeathed to a resident surviving spouse, paragraph 67 of the Eighth Schedule provides a rollover: the deemed disposal falls away, the surviving spouse inherits the assets at the deceased's original base cost, and CGT is deferred to the survivor's eventual disposal. This rollover does not apply to a non-resident surviving spouse.

What is donations tax, and how does it interact with estate transfers?

Donations tax under Sections 54 to 64 of the Income Tax Act applies to lifetime transfers made without full consideration. The tax rate mirrors the estate duty structure: 20% on cumulative donations not exceeding ZAR 30 million and 25% on the excess [SC5]. The cumulative threshold is measured from 1 March 2018 onwards.

The 2026 Budget increased the annual donations tax exemption for natural persons from ZAR 100,000 to ZAR 150,000 per year of assessment, the first increase since 2007 [SC2]. The exemption for entities (companies and trusts) rose from ZAR 10,000 to ZAR 20,000. Donations between spouses, donations to approved public benefit organisations, donations to the government, and bona fide maintenance contributions are exempt without limit [SC5].

The donor pays donations tax within the month following the month in which the donation takes effect. If the donor fails to pay, the donor and donee are jointly and severally liable. The form IT144 (Declaration by Donor/Donee) is submitted to SARS via eFiling.

A donation of an appreciated asset triggers both donations tax on the gross value and CGT on the deemed disposal at market value at the time of transfer, making lifetime gifting of low-base-cost property relatively costly.

What does the executor do, and what are the costs?

Under the Administration of Estates Act 66 of 1965 the death must be reported to the Master of the High Court. Once satisfied, the Master issues a Letter of Executorship granting the executor legal authority to administer the estate. The executor's duties include: collecting and valuing all assets; paying creditors; filing the deceased's final income tax return (ITR12) for the period from the start of the tax year to the date of death; filing the estate IT12EI return for post-death income earned during administration; filing the Estate Duty Return (REV267) within 12 months of date of death; preparing a Liquidation and Distribution Account for the Master; and distributing assets to heirs only after all liabilities including estate duty are settled.

Executor remuneration is capped by the Chief Master's Directive 4 of 2011 at 3.5% of the gross estate value plus 6% on income collected during administration. VAT applies where the executor is VAT-registered. Total winding-up costs including Master's fees, Gazette advertising, conveyancing, and SARS clearance typically amount to 4% to 6% of the gross estate value. A straightforward estate generally takes between 9 and 15 months to wind up.

For the broader South African tax context, see the South Africa country overview. The interaction between estate duty and CGT on appreciated property involves complex timing considerations: consult a qualified tax professional registered with the South African Institute of Tax Professionals (SAIT) or a Chartered Accountant SA (CA(SA)) with deceased-estate experience before making any decisions about estate structuring or lifetime transfers.