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Tax & Deceased Estate
- 15 November 2023
- Accounting
- The Tax Faculty Tax Specialist
This FAQ article is based on tax law for the year ending 29 February 2024.
1. Background
Understanding what the steps are involved in finalising a deceased estate is crucial. In recent cases, the Estate duty department of SARS completed audits such as Estate Duty (ED), Capital Gains Tax (CGT), and more. The process starts where a Deceased Estate Clearance (DEC) certificate is issued through the contact center. Typically, we anticipate this DEC certificate within a few weeks. However, there are significant challenges in obtaining it from SARS.
With this in mind, one can not help but ask: What steps does SARS follow before issuing a Deceased Estate Clearance (DEC) certificate? Does this involve conducting a new audit, or is it primarily a validation process ensuring the completion of tax returns, submission, debt settlement, and compliance? Moreover, what factors contribute to the extensive waiting period in obtaining a DEC?
2. The Problem / Facts
What steps does SARS take to finalise a deceased estate before issuing a Deceased Estate Clearance (DEC) certificate? Additionally, does SARS conduct a secondary audit, and what causes the significant delay in issuing the DEC certificate?
3. Application of the Law to the Facts
The SARS website and the Department of Justice provide guidance regarding the process of winding up an estate. You can refer to the Administration-of-Deceased-Estates-SARS-2022.pdf guide as well as https://ow.ly/y8hu50Q7lt7 or look at the resources on the Tax Faculty page as well as the various webinars about Deceased Estates for more detailed information.
Various factors can delay the process of receiving a DEC certificate. Even though a final income tax assessment for an estate may have been received and paid, the estate’s tax affairs can only be considered to have been finalised once a final tax clearance has been issued by SARS. Although it is not always the case, it is common for SARS to do an audit and the tax clearance will not be issued until the audit has been completed in such a case. SARS can sometimes take months before issuing a tax clearance and it is not uncommon for SARS to make further claims on the estate. This can delay a final distribution.
Once all the tax liabilities have been paid in full and the Deceased Estate Compliance certificate has been issued, it is submitted to the Master.
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