SARS and a deceased estate: tax filings the executor must make
What the executor of a South African deceased estate must do at SARS: registering the estate, filing the deceased's final tax return, the estate's own returns, the REV1600 estate-duty return and SARS clearance.
SARS treats a deceased person and their estate as two separate taxpayers. The executor is responsible for filing both - the deceased's final personal returns up to date of death, and the estate's returns from date of death to discharge.
Skipping any of these steps stalls the Master from issuing the filing slip that closes the file.
Step 1: Register the estate with SARS
Once Letters of Executorship are issued, register the estate as a new taxpayer on SARS eFiling using the executor's profile. The estate gets its own income-tax number, distinct from the deceased's.
Step 2: File the deceased's final return
Lodge the deceased's final ITR12 covering the period from 1 March of the tax year to date of death. Capital gains realised on the deemed disposal at death are included here.
Most assets are deemed to be disposed of at market value at date of death for capital gains tax purposes (with rollover relief between spouses).
Step 3: File the estate's returns
From date of death until the L&D Account is finalised, the estate is its own taxpayer. Income earned by estate assets (interest, rentals, dividends) is taxed in the estate's hands at the trust rates of tax.
Step 4: Lodge the REV1600 estate-duty return
Estate duty is levied at 20% on the dutiable estate above R3.5 million (and at 25% above R30 million). The REV1600 return is lodged with SARS together with the L&D Account submitted to the Master.
The R3.5 million abatement can be rolled over from a predeceased spouse, giving the surviving spouse's estate up to R7 million of abatement.
Step 5: Apply for SARS clearance
Once all returns are lodged and any tax liabilities paid, apply to SARS for the deceased estate compliance pin and the formal clearance letter. The Master will not issue the filing slip without clearance.
Practical tips
- Move the deceased's eFiling profile to the executor's name as soon as the estate is registered. Trying to operate it from the family's old credentials becomes painful when SARS sends one-time-pins to a phone you cannot answer.
- Keep a separate folder for SARS correspondence. Estate-duty assessments take months and the executor will be asked, repeatedly, for documents from the L&D Account.
Frequently asked questions
Does every deceased estate pay estate duty?
No. Estate duty is only payable on the dutiable estate above R3.5 million (rolled over to R7 million if the predeceased spouse's abatement is unused). Most South African estates fall below the threshold.
Are retirement annuities included in the estate-duty calculation?
Retirement-fund proceeds paid out under Section 37C of the Pension Funds Act fall outside the estate. They are not subject to estate duty in the deceased's hands but are taxed in the recipient's hands per the retirement-fund tax tables.
Can the executor distribute before SARS clearance?
Distributing before SARS clearance is risky: if a tax liability later comes to light, the executor can be held personally liable. Best practice is to distribute only after the clearance letter is in hand.