A taxpayer passed away in 2019. There was a refund owing to her for the 2019 year of assessment. Her husband is the beneficiary of her estate.
Please advise on the following:
We accept that you are not the executor of the estate, but you can’t ‘provide the surviving spouses banking details’ to SARS to receive the refund.
The executor must collect the money. The person, the estate of the deceased in this instance, must register as a taxpayer when the person has taxable income or is required to submit a return. This “new taxpayer” is treated as a natural person but is not entitled to the rebates (section 6A or 6B). The obligation, on the executor as representative taxpayer, is to report the death to SARS in order to code the estate of the deceased. In practice SARS then automatically registers the estate of the deceased as a taxpayer.
The executor will then, with respect to post death transactions, have to file a return of income, unless the gross income of the estate of a deceased person consisted solely of interest, the gross income of which doesn’t exceed R23 800. If SARS didn’t register the estate of the deceased person, the executor will then have to register it, but only if the estate is a resident and carried on any trade, through the executor of course, or the gross interest that accrues to the estate exceeds R23 800 or there is a capital gain in excess of the R40 000 (not the R300 000).
Under section 66(13)(a) of the Income Tax Act, the return for normal tax to be made by any person in respect of any year of assessment shall be a return in the case of a person (other than a company), for the whole period of twelve months ending upon the last day of February: Provided that where –
(i) a person dies, a return shall be made for the period commencing on the first day of that period and ending on the date of death;
(ii) … In terms of section 9HA of the Income Tax Act, the deceased person is treated as having disposed of his or her assets, with certain exclusions (that may not apply in this instance), at the date of death for an amount equal to the market value thereof. Where the surviving spouse is the heir, section 9HA provides for a roll-over of the capital gain.
A completely new taxpayer, referred to as the estate of the deceased person, see section 9HA and section 25 of the Income Tax Act, comes into existence and the return (or returns) from date of death until finalisation of the estate is then due for this new taxpayer. See the SARS website for more, and updated, information about registering the estate.
Further webinar commentary on Tax consequences of a deceased taxpayer can be accessed here.