Are assets acquired by a surviving spouse as a result of repudiation by the heirs in a deceased estate treated as having been disposed of by the deceased for the benefit of that surviving spouse in terms of section 9HA(2) of the IT Act?
Important:
This answer is based on tax law year ending 28 February 2019.
Answer:
In my view, section 9HA92) would only apply if the surviving spouse acquires the assets by ab intestate succession.
Where there has been a repudiation of an inheritance what will happen to the repudiated benefits will depend on the terms of the will, if there is one. Where a benefit has been bequeathed in a will to the deceased's surviving spouse and descendants and then one descendant repudiates his / her share, that share will devolve upon the surviving spouse. This is the case even if the will provides differently. This doesn’t seem to apply in your case.
I agree that there is no disposal by the heir when they repudiate. I need to do more research to see what the consequences of repudiation are.
Your view, that the assets are, because of the repudiation, then not dealt with in the last will and testament, and consequently that the deceased died intestate with respect to those assets, is a valid one. The problem is that the succession will then ben in terms of the intestate succession Act and I am not sure if the heirs can repudiate that as well. Put differently, that may well lead to a donation.