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Estate Duty Planning: Utilising the General Deduction and Spousal Portability of the Unused Basic Amount
- 15 July 2025
- Administration of Estates
- The Tax Faculty
This article is based on tax law for the year ending 29 February 2026.
Question:
A surviving spouse inherited R2 million from her deceased partner. She is now engaged in estate planning and needs to determine the appropriate amount to use in the general deduction formula for estate duty purposes. The question is whether she is limited to the standard R3.5 million deduction, or whether she can benefit from any unused portion of her deceased spouse’s basic amount.
Answer:
The Problem / Facts
A surviving spouse inherited R2 million from her deceased partner. She is now engaged in estate planning and needs to determine the appropriate amount to use in the general deduction formula for estate duty purposes. The question is whether she is limited to the standard R3.5 million deduction, or whether she can benefit from any unused portion of her deceased spouse’s basic amount.
Analysis of Tax Issues
The key tax issue centres on the operation of the general deduction formula under estate duty legislation, particularly in relation to the portability of unused basic amounts between spouses. Clarification is required on whether the R3.5 million basic amount may be increased by any unused portion from the deceased partner’s estate.
Tax Issues and Applicable Legislation
- Application of general deduction formula: Section 4A of the Estate Duty Act 45 of 1955
- Portability of unused basic amount: Section 4A(2) of the Estate Duty Act 45 of 1955
- Estate duty calculation: Section 3 of the Estate Duty Act 45 of 1955
Applicable Law
- Section 4A of the Estate Duty Act 45 of 1955 provides for a general deduction in determining the dutiable estate, which includes a basic amount of R3.5 million.
- Section 4A(2) specifically addresses the portability of the basic amount. It provides that where a deceased person was survived by a spouse and the full R3.5 million deduction was not utilised in the deceased's estate, the unused portion may be carried over and added to the surviving spouse’s basic amount.
Application of Law to Facts
- In the present case, the deceased partner’s estate had access to a basic amount of R3.5 million. As only R2 million was inherited by the surviving spouse—and assuming this represents the net estate after deductions an unused portion of R1.5 million remains (R3.5 million - R2 million).
- Consequently, when the surviving spouse structures her own estate, she may claim a general deduction of R5 million (comprising the standard R3.5 million plus the R1.5 million unused portion from the deceased partner’s estate).
This portability provision ensures that married couples can fully utilise.