Estate Duty.
Once the Executor has finalised all the administration in the deceased estate, the remaining assets (after paying all the debts) will be distributed to the beneficiaries.
A beneficiary can consist of either heirs and/or legatees. A legatee is a person who receives a specific asset from the deceased estate. An heir is a person who receives the balance of the estate (that is, after all disposals to a legatee are finalised).
Who is liable for Estate Duty?
It is normally the responsibility of the Executor to pay the duty as levied on the property of the deceased. However, there are instances in which the estate duty is payable directly by the person who is receiving the property. For example, where a policy is payable directly to a beneficiary, the Estate Duty attributable to such policy is payable by the beneficiary (in other words, this portion of the Estate Duty will not be paid by the deceased estate).
Can the executor be held personally liable for estate duty?
The executor is personally liable for the estate duty payable in his or her representative capacity if:
- The estate duty liability remains unpaid and the executor disposes of the amounts in respect of which the estate duty is due; or
- an executor disposes of funds that he or she possesses in a representative capacity or that came into his or her possession after the estate duty liability is due and the funds could legally have been applied to settle the estate duty liability.
An exception to the general rule is that an executor cannot be held personally liable for the estate duty liability in respect of an asset over which the executor had no control.
If you have any queries in this regard please do not hesitate to contact us in this regard.
Expansion of the Renewable Energy Tax Incentive.
Investors in PV projects below 1 MW are able to deduct 100 per cent of the cost in the first year.
Under the expanded incentive, businesses will be able to claim a 125 per cent deduction in the first year for all renewable energy projects with no thresholds on generation capacity. The adjusted incentive will only be available for investments brought into use for the first time between 1 March 2023 and 28 February 2025. For a business with positive taxable income, the deduction will reduce its tax liability. For example, a renewable energy investment of R1 million would qualify for a deduction of R1.25 million. Using the current corporate tax rate, this deduction could reduce the corporate income tax liability of a company by R337 500 in the first year of operation.
Should you require professional advice in this regard please do not hesitate to contact us.
Rooftop Solar Tax Incentive.
To increase electricity generation, government is also proposing a rooftop solar incentive for individuals to invest in solar PV. Individuals will be able to receive a tax rebate to the value of 25 per cent of the cost of any new and unused solar PV panels. To qualify, the solar panels must be purchased and installed at a private residence, and a certificate of compliance for the installation must be issued from 1 March 2023 to 29 February 2024.
The rebate is only available for solar PV panels, and not inverters or batteries, to focus on the promotion of additional generation. It can be used to offset the individual’s personal income tax liability for the 2023/24 tax year up to a maximum of R15 000 per individual. For example, an individual who purchases 10 solar panels at a cost of R40 000 can reduce their personal income tax liability for the 2023/24 tax year by R10 000.
Should you require professional advice in this regard please do not hesitate to contact us.
Two-Pot Retirement System.
The first phase of legislative amendments to the retirement system is due to take effect on 1 March 2024. The intent of these amendments is to enable pre-retirement access to a portion of one’s retirement assets, while preserving the remainder for retirement. Retirement fund contributions will remain deductible up to R350,000 per year or 27.5 percent of taxable income per year – whichever is lower. Permissible withdrawals from funds accrued before 1 March 2024 will be taxed according to the lump sum tables.
Withdrawals from the “savings pot” before retirement will be taxed at marginal rates. On retirement, any remaining amounts in the savings pot will be taxed according to the retirement lump sum table (for example, R550 000 is a tax-free lump sum on retirement).
Four areas required additional work: a proposal for seed capital, legislative mechanisms to include defined benefit funds in an equitable manner, legacy retirement annuity funds and withdrawals from the retirement portion if one is retrenched and has no alternative source of income. The first three matters will be clarified in forthcoming draft legislation. The final matter will be reviewed as a second phase of implementation.
Should you have any queries in this regard do not hesitate to contact us in this regard.
Sincerely,
