South Africa does not impose a separate inheritance tax on an heir merely because the heir receives an inheritance.

Estate duty, where applicable, is calculated in relation to the deceased’s dutiable estate before ordinary estate distributions are made. The ordinary section 4A abatement is currently R3.5 million, and the estate duty rates are currently 20% on the first R30 million of dutiable value and 25% above that amount.

Estate duty is not always paid from the deceased estate itself. SARS confirms that, in some circumstances, estate duty attributable to property paid directly to a beneficiary, such as certain life policy proceeds, can be payable by that beneficiary rather than from the deceased estate.

An heir also does not include an inheritance in ordinary taxable income merely because it was received. If the heir later sells an inherited capital asset, CGT can arise on subsequent growth. SARS generally treats the inherited asset’s base cost by reference to the value or tax base at which the asset passed through the estate, subject to special rollover rules for qualifying spouses.

Cross-border inheritances can create additional foreign tax, exchange control or reporting issues depending on the heir and the asset.

See also: How is Estate Duty calculated? | How to avoid estate duty in South Africa?

Disclaimer: The information provided here is intended as general guidance only and does not constitute legal, tax, or financial advice. Every situation is unique, and legislation is subject to change. We invite you to reach out to our team at Wealth and Legacy Group for guidance tailored to your specific circumstances.