Deceased estateNormal tax consequences-Mr X Recently died on therefore deceased

Taxable income+Interest income (Apportioned using days)+From X+From Y=Total interest-Basic interest exemption S 10(1)(i) Not applicable for deceased estate

Income accrued to the deceased estate and derived for the immediate/future benefit of ascertained heir/legatee Deemed to be income of heir/legatee, not income of the deceased estate Section 25 (1)-Rental income Taxed in heir/legatee hands-Local interest Taxed in heir/legatee hands-Foreign interest Taxed in heir/legatee hands-Local dividends Taxed in heir/legatee hands-Foreign Dividends Taxed in heir/legatee hands

Any deductions which may be granted, shall, to the to the extent which the income is deemed to accrue to heir/legatee, be deemed to be a deduction which may be made by heir/legatee Section 25 (2)

+Taxable capital gain Section 26A

=Taxable income

Total tax liabilityTax per tableRebates Not applicable for deceased estate=Normal tax liability

Capital gains taxCapital gains consequences-Mr X recently died on therefore deceased-Mr X is deemed to have disposed his or her assets for an amount equal to market value of the assets but excluded (Paragraph 40):-Assets transferred to surviving spouse-A long term insurance policy of the deceased which capital gain or loss would be disregarded in terms of paragraph 55-Interest in funds in the republic or outside the republic deceased which capital gain or loss would be disregarded in terms of paragraph 54

Capital gains calculation Deceased estate Disposal of assets which deemed to have been disposed of by the deceased and transferred directly to estate of the deceased:Proceeds-Base cost (Deemed to have been acquired at cost equal to market value by the estate Paragraph 40)=Capital gain/lossCapital gains tax rules apply

=Sum of capital gains and lossesxxx+Annual exclusion (Limited to 33.3%)+30 000=Aggregate capital gain/lossxxx-Assessed capital loss brought forward (xxx)=Net capital gainxxxTaxable capital gain at 33.3% (Natural person) xxx

Capital gains calculation Deceased estateAssets which deemed to have been disposed by the deceased and transferred directly to heir/legatee of the deceased:Proceeds-Base cost (Deemed to have been acquired at cost equal to market value by the heir/legatee Paragraph 40)=Capital gain/loss

-Asset disposed of by deceased estate to heir/legatee of the deceased-Deemed to have been disposed at proceeds = Base cost-Heir/legatee of the deceased, deemed to have been acquired at cost = Base cost-Annual exclusion where a person dies during the year = R300000