The Davis Tax Committee issues its second report on estate duty
28 September 2016
Posted by: Author: Jenny Klein
Author: Jenny Klein (ENSafrica)
The Davis Tax Committee (“DTC”) released its much-anticipated second (and final) interim report (the “Report”) on estate duty on 24 August 2016. The Report has been published with amendments taking into account the public’s comments that were submitted in respect of the first interim report.
The most significant recommendations of the Report pertaining to estate duty and donations tax are highlighted below. Many of these recommendations involve a comprehensive overhaul of the various tax exemptions applicable to transfers of assets between spouses.
The Report recommends that the primary abatement should be significantly increased from ZAR3.5-million to ZAR15-million for all taxpayers, irrespective of their relationship status, and that the inter-spouse abatement in the Estate Duty Act should be withdrawn.
The Report notes that the primary abatement has not been increased since 1 March 2007, thus allowing a substantial element of fiscal drag to enter the estate duty system. As a result, there is an urgent need for a generous increase in this abatement.
The Report also recommends that the rate of estate duty should be increased from 20% to 25% of the dutiable value of a deceased estate that exceeds ZAR30-million, thus introducing a progressive system of tax rates for estates with a net dutiable value of more than ZAR15-million and mitigating the potential loss of estate duty collections in light of the other estate duty recommendations.
Please click here to read full article.
This article first appeared on ensafrica.com.