Section 3 (Estate Duty Act) – What constitutes estate duty

3. What constitutes an estate

(1)     For the purposes of this Act the estate of any person shall consist of all property of that person as at the date of his death and of all property which in accordance with this Act is deemed to be property of that person at that date.

(2)     “Property” means any right in or to property, movable or immovable, corporeal or incorporeal, and includes –

(a)     any fiduciary, usufructuary or other like interest in property (including a right to an annuity charged upon property) held by the deceased immediately prior to his death;

(b)     any right to an annuity (other than a right to an annuity charged upon any property) enjoyed by the deceased immediately prior to his death which accrued to some other person on the death of the deceased,

(bA)     . . . . . .

[Paragraph (bA) inserted by section 2(1) of Act 25 of 2015, substituted by section 1(1) of Act 17 of 2017 and by section 1(1) of Act 34 of 2019 and deleted by section 1(1)(a) of Act 23 of 2020 deemed effective on 30 October, 2019 and applicable in respect of (a) the estate of a person who dies on or after that date; and (b) any contributions made on or after 1 March, 2016]

but does not include –

(c)     in the case of a deceased who was not ordinarily resident in the Republic at the date of his death, any right in immovable property situate outside the Republic;

[Paragraph (c) substituted by section 2 of Act 65 of 1960]

(d)     any right in movable property physically situate outside the Republic if the deceased was not ordinarily resident in the Republic at the date of his death;

[Paragraph (d) amended by section 2 of Act 65 of 1960]

(e)     any debt not recoverable or right of action not enforceable in the Courts of the Republic if the deceased was not ordinarily resident in the Republic at the date of his death;

[Paragraph (e) substituted by section 2 of Act 65 of 1960]

(f)     any goodwill, licence, patent, design, trade mark, copyright or other similar right not registered or enforceable in the Republic or attaching to any trade, business or profession in the Republic if the deceased was not ordinarily resident in the Republic at the date of his death;

[Paragraph (f) amended by section 2 of Act 65 of 1960]

(g)     in the case of a deceased who was not ordinarily resident in the Republic at the date of his death –

(i)      any stocks or shares held by him in a body corporate which is not a company; and

(ii)     any stocks or shares held by him in a company, provided any transfer whereby any change of ownership in such stocks or shares is recorded is not required to be registered in the Republic;

[Paragraph (g) substituted by section 2 of Act 65 of 1960]

(h)     any rights to any income produced by or proceeds derived from any property referred to in paragraph (e), (f) or (g).

(i)      so much of any benefit which is due and payable by, or in consequence of membership or past membership of, any pension fund, pension preservation fund, provident fund, provident preservation fund or retirement annuity fund as defined in the Income Tax Act, 1962 (Act No. 58 of 1962), on or as a result of the death of the deceased.

[Paragraph (i) added by section 2 of Act 60 of 2008]

(3)     Property which is deemed to be property of the deceased includes –

(a)     so much of any amount due and recoverable under any policy of insurance which is a “domestic policy”, upon the life of the deceased as exceeds the aggregate amount of any premiums or consideration proved to the satisfaction of the Commissioner to have been paid by any person who is entitled to the amount due under the policy, together with interest at six per cent per annum calculated upon such premiums or consideration from the date of payment to the date of death: Provided that the foregoing provisions of this paragraph shall not apply in respect of any amount due and recoverable under a policy of insurance, if –

(i)      the amount due under such policy is recoverable by the surviving spouse or child of the deceased under a duly registered ante-nuptial or post-nuptial contract; or

(iA)   the Commissioner is satisfied that the policy was taken out or acquired by a person who on the date of death of the deceased was a partner of the deceased, or held any share or like interest in a company in which the deceased on that date held any share or like interest, for the purpose of enabling that person to acquire the whole or part of –

(aa)   the deceased’s interest in the partnership concerned; or

(bb)   the deceased’s share or like interest in that company and any claim by the deceased against that company,

and that no premium on the policy was paid or borne by the deceased; or

[Subparagraph (iA) inserted by section 2 of Act 92 of 1983 and substituted by section 4 of Act 1981 of 1985]

(ii)     except where the provisions of paragraph (i) or (iA) of this proviso apply, the Commissioner is satisfied and remains satisfied that such policy was not effected by or at the instance of the deceased, that no premium on such policy was paid or borne by the deceased, that no amount due or recoverable under such policy has been or will be paid into the estate of the deceased and that no such amount has been or will be paid to, or utilized for the benefit of, any relative of the deceased or any person who was wholly or partly dependent for his maintenance upon the deceased or any company which was at any time a family company in relation to the deceased;

[Sub-para (ii) amended by section 2 of Act 92 of 1983]

[Paragraph (a) amended by section 2 of Act 81 of 1965, substituted by section 4 of Act 1992 of 1971 and section 7 of Act 30 of 2000]

(a)bis ……….

[Paragraph (a)bis inserted by section 2 of Act 81 of 1965, substituted by section 3 of Act 102 of 79, section 10 of Act 106 of 1980 and section 2 of Act 92 of 83, amended by section 6 of Act 27 of 1997, substituted by section 13 of Act 30 of 1998 and deleted by section 2 of Act 60 of 2008]

(b)     any property donated by the deceased in terms of a donation which was exempt from donations tax under section 56(1)(c) or (d) of the Income Tax Act, 1962 (Act No. 58 of 1962), if that property is not otherwise included as property of the deceased for purposes of this Act;

[Paragraph (b) substituted by section 5 of Act 31 of 2005 with effect from 8 November 2005]

(c)     ……….

[Paragraph (c) amended by section 8 of Act 77 of 1964, section 3 of Act 89 of 1972 and section 4 of Act 81 of 1985 and deleted by section 9 of Act 87 of 1988]

(cA)  the amount of any claim acquired by the estate of the deceased under section 3 of the Matrimonial Property Act, 1984, against the deceased’s spouse or the estate of his deceased spouse, in respect of any accrual contemplated in that section;

[Paragraph (cA) inserted by section 4 of Act 81 of 1985]

(cB)  ……….

[Paragraph (cB) inserted by section 9 of Act 87 of 1988 and deleted by section 7 of Act 97 of 1993]

(d)     property (being property not otherwise chargeable under this Act or the full value of which is not otherwise required to be taken into account in the determination of the dutiable amount of the estate) of which the deceased was immediately prior to his death competent to dispose for his own benefit or for the benefit of his estate.

[Paragraph (d) substituted by section 2 of Act 65 of 1960]

(e)     so much of the amount of any contribution made by the deceased in consequence of membership or past membership of any pension fund, provident fund, or retirement annuity fund, as was allowed as a deduction in terms of paragraph 5 of the Second Schedule to the Income Tax Act, 1962 (Act 58 of 1962), to determine the taxable portion of the lump sum benefit that is deemed to have accrued to the deceased immediately prior to his or her death.

[Paragraph (e) added by section 1(1)(b) of Act 23 of 2020 deemed effective on 30 October, 2019 and applicable in respect of (a) the estate of a person who dies on or after that date; and (b) any contributions made on or after 1 March, 2016]

(4)     ……….

[Subsection (4) amended by section 8 of Act 77 of 1964 and section 4 of Act 92 of 1971, substituted by section 9 of Act 87 of 1988 and deleted by section 7 of Act 97 of 1993]

(5)     For purposes of paragraph (d) of subsection (3) –

(a)     the term “property” shall be deemed to include the profits of any property;

(b)     a person shall be deemed to have been competent to dispose of any property –

(i)      if he had such power as would have enabled him, if he were sui juris, to appropriate or dispose of such property as he saw fit whether exercisable by will, power of appointment or in any other manner;

(ii)     if under any deed of donation, settlement, trust or other disposition made by him he retained the power to revoke or vary the provisions thereof relating to such property;

(c)     the power to appropriate, dispose, revoke or vary contemplated in paragraph (b) shall be deemed to exist if the deceased could have obtained such power directly or indirectly by the exercise, either with or without notice, of power exercisable by him or with his consent;

(d)     the expression “property of which the deceased was immediately prior to his death competent to dispose” shall not include the share of a spouse of a deceased in any property held in community of property between the deceased and such spouse immediately prior to his death.

[Subsection (5) inserted by section 2 of Act 65 of 1960]