How can one avoid unnecessary delays when dealing with deceased tax
The tax implications when administering a deceased estate often bring their own challenges. Navigating the time periods and correspondence from the Receiver of Revenue often lead to delays in the submission of tax returns and receiving the deceased estate compliance certificate (DEC). The DEC is a letter that SARS issues once they are satisfied that no further monies are owing to them and the deceased pre- and post-death tax has been dealt with satisfactorily. This is one of the Master of the High Court’s final requirements, and they will not allow an estate being finalised and archived without it.
In order to hasten this process, at Appleton we liaise with the deceased’s tax practitioner if they had one as they have access to the deceased’s e-filing profile and advise the administrator’s which tax certificates they require from the various institutions to finalise outstanding tax returns expeditiously.
We then contact relevant institutions for these tax certificates as soon as we are in receipt of the Letters of Executorship, as the institutions often take time in generating the certificates especially if they are to be manually generated. Appleton utilises skilled tax practitioners with estate experience to handle any outstanding returns to mitigate any objections or penalties raised by SARS.
It is important to also be aware of post-death income as post-death tax also applies. This income could be rental that accrues after date of death as well as the interest earned on an estate late bank account. This is why all transactions after date of death are to be recorded and made clear as to where they come from so as to avoid confusion for the tax practitioner and to prevent excess administrative effort.
Estate Duty is also a form of tax that needs to be dealt with both as a requirement by the Master as well as SARS. Estate Duty is essentially the tax is payable on the dutiable estate of the deceased.
There is a R3.5 million abatement which means if an estate in its value falls below R3.5 million it is not considered dutiable and thus there is no Estate Duty payable to SARS, but a REV267 form still needs to be completed and submitted to the Master reflecting the calculation of possible Estate Duty.
The executor owes it to the estate to ensure that the estate duty is calculated and is aware of what potentially reduces the estate duty payable to SARS. If there is a delay in paying estate duty it attracts a penalty of 6% on the duty payable. Therefore, we stress that this be paid timeously once the estate duty assessment is received from SARS. The assessment takes approximately 90 days to be completed by the estate duty department within SARS, however, it could be delayed if SARS is not provided with all of the correct information listed on the SARS website. Tax practitioners will also be aware of what needs to be submitted to SARS.
Estate tax, along with all of different aspects within an estate, comes with its own intricacies and the best way to navigate these intricacies is consulting with a specialist who deals with this on a regular basis as well as ensuring requirements are complied with correctly and timeously as failing to do would be an injustice to the deceased.
