System changes pertaining to Estates will be introduced on 9 December 2016 in line with key legislative requirements.
The introduction of these changes aims to optimise the processing of deceased estates and will also lighten the administrative burden on executors of deceased estates.
Deceased Estates – section 25(1) of the Income Tax Act no. 58 of 1962
A new dispensation for income received by or accrued to the executor of a deceased estate, as well as certain acquisitions or disposals of assets by the executor of the deceased estate will be introduced and come into effect in respect of persons who die on or after 1 March 2016. This will be done by creating a new income tax record for the deceased estate which will do away with anomalies which currently exist pertaining to the income received or accrued and the acquisition/disposal of assets after date of death. The deceased estate will, therefore, be subject to a second income tax registration (new income tax entity).
Currently, for deaths prior to 1 March 2016, income other than Capital Gains Tax (CGT) accrued after date of death, is taxed in the hands of the beneficiaries. CGT however, is taxed by way of a Special Trust Type A. With the implementation of the legislative changes, all income including CGT will be taxed in the hands of the deceased estate. The deceased estates for deaths on or after 1st March 2016 will no longer be required to register for Special Trusts Type A.
Second Income Tax Registration
Only deceased estates of taxpayers who passed away on or after 1 March 2016 and where the executor of the estate had received post date of death income, or there was certain acquisitions/disposals of assets by the executor after date of death will be subject to the second income tax registration. Please note that the second registration will not be automatically registered when the taxpayer record is marked as a “Deceased Estate”.
The executor (registered representative) requesting the second income tax reference number must be the same as the executor on record at SARS in respect of the taxpayer’s income tax reference number to date of death. The application for the second income tax reference number can be processed via eFiling or at a SARS branch. If the executor was replaced after the taxpayer records were marked as a “Deceased Estate”, a letter of appointment must be provided in order to change the representative details.
The banking details for the “to date of death” and “post date of death” registrations must be the banking details of the deceased estate provided by the executor and must not be the banking details of the deceased taxpayer. Where the banking details used in the first registration differs from those in the second registration, the representative must provide and meet all FICA requirements to change the banking details of the deceased estate.
A list of supporting documents required for the second registration can be accessed on the SARS website www.sars.gov.za >Individuals >Estates.
For more information please visit our website www.sars.gov.za to access the “Completion Guide for Executors” as well as relevant FAQs. You can also call the SARS Contact Centre on 0800 00 7277 or visit your nearest SARS branch.
THE SOUTH AFRICAN REVENUE SERVICE