How does SARS register a deceased estate for income tax?
14 April 2015
Posted by: Author: SAIT Technical
Author: SAIT Technical
Q: We have a
client which is an estate. All the income tax returns (2014-2015) was submitted
up and till date of death. There was shares on which we paid CGT on the deemed
Now, the estate sold shares and made a profit and needs to
pay CGT. How does SARS register an estate as separate taxpayer?
On two occasions the SARS consultants advised that the tax number
is already "coded as estate” and we do not need a new tax number.
But how do we declare the CGT of the estate as all returns
were already submitted on the existing tax number?
A: We may not
have enough information to provide the guidance required.
The definition of ‘person’ in section 1(1) of the Income Tax
Act includes (in paragraph (b)) the estate of a deceased person. The deceased person and his or her estate are
therefore two separate taxpayers. The
estate of a deceased person must therefore be registered as a taxpayer and the
capital gain (or loss) realised on the disposal of assets not transferred
directly to an heir or legatee of the deceased person or transferred to the
surviving spouse of that deceased person as contemplated in paragraph 67(2)(a)
will be declared in the tax return for the estate of a deceased person. This is in terms of paragraph 40 of the
Eighth Schedule to the Income Tax Act.
For the purposes of the Schedule, the disposal of an asset by the
deceased estate of a natural person must be treated in the same manner as if
that asset had been disposed of by that natural person. The only difference is that the annual
exclusion is not available to the estate.
The registration is done by submitting the IT77.
We understand that SARS for assessment purposes treats the
estate of the deceased person as a special trust.
The fact that the deceased was "coded as (an) estate” does
not imply that the estate of the deceased person is registered as a
taxpayer. It is only relevant to the
last return of the deceased.
Disclaimer: Nothing in this query and answer should be construed as
constituting tax advice or a tax opinion. An expert should be consulted for
advice based on the facts and circumstances of each transaction/case. Even
though great care has been taken to ensure the accuracy of the answer, SAIT do
not accept any responsibility for consequences of decisions taken based on this
query and answer. It remains your own responsibility to consult the relevant
primary resources when taking a decision.