Estate duty in South Africa is a tax levied on the dutiable value of a deceased person’s estate. Whether you’re an executor, a family member managing an estate, or planning your own affairs, understanding the process is key.
One of the most important documents in this process is the REV 246 form. This SARS form plays a critical role in ensuring accurate estate duty calculation and tax compliance before the estate can be wound up.
In this guide, we’ll break down what the REV 246 is, why it matters, and how estate duty tax in South Africa works, step by step.
What Is Estate Duty in South Africa—and Who Pays It?
Estate duty (not to be confused with “estate tax,” which is a common international term) is the tax imposed on the transfer of wealth at death.
Who pays estate duty in South Africa?
It’s paid by the estate itself, not the heirs. It applies when the gross value of the estate exceeds R3.5 million.
The rate is:
- 20% on the first R30 million above the threshold
- 25% on the value above R30 million
This is a crucial consideration in estate planning, as proper structuring can minimise unnecessary taxation.
Introducing the REV 246 Form: What It Is and When It’s Required
The REV 246 form is a SARS-required document that details the valuation of immovable property in an estate. It is used to determine the dutiable value of the estate for the purposes of estate duty.
When must it be submitted?
- When the deceased held property or other significant assets.
- For all estates where estate duty is applicable.
- Before the estate can be finalised and wound up.
What Information Must Be Included in the REV 246 Form?
To complete the REV 246 form in South Africa, the appointed executor must provide comprehensive and accurate details about the deceased and their estate. This includes personal information such as the deceased’s full name, ID number, and date of death. A detailed list of all assets and liabilities is required, with particular attention given to immovable property, such as homes, land, or other real estate.
Supporting documentation must be submitted alongside the form. These include certified property valuations, a copy of the deceased’s last will and testament (if available), and the official Letters of Executorship issued by the Master of the High Court. These documents confirm the executor’s authority to act on behalf of the estate.
Accuracy is essential, especially in the valuation of assets. Undervaluing property or other assets can result in delays in the finalisation of the estate, disputes among beneficiaries, and potential penalties from SARS. Proper valuation ensures smooth processing and compliance with legal requirements.
Estate Duty Calculation: How Is It Worked Out in South Africa?
In South Africa, the estate duty calculation follows a specific process governed by the Estate Duty Act.
The process begins by determining the gross value of the estate, which includes all assets owned by the deceased at the time of death. This covers immovable property (like houses and land), movable property (vehicles, jewellery, personal belongings), cash in bank accounts, investments, shares, retirement funds, and business interests.
Next, allowable deductions are subtracted from the gross value. These include:
- funeral and burial costs,
- debts owed by the deceased at the time of death,
- executor’s and administration fees, and
- certain bequests to surviving spouses or public benefit organisations.
After deductions, the Section 4A abatement is applied, which exempts the first R3.5 million of the net estate from estate duty.
The remaining balance is taxed at 20% for estates up to R30 million, and 25% on any amount exceeding that threshold.
What Happens After Submitting the REV 246 Form?
Once the REV 246 form and all supporting documents are submitted to SARS, the estate enters the assessment phase. SARS carefully reviews the valuation of the estate and all accompanying documentation, such as property valuations, the will, and Letters of Executorship. Their goal is to ensure all information is accurate and complete.
If the submission is in order, SARS proceeds to calculate the final estate duty tax based on the declared net estate value. Before the estate can be formally wound up and any inheritance distributed, any outstanding estate duty must be paid in full.
However, if there are discrepancies, missing details, or questionable figures, SARS may:
- request additional information from the executor, or
- reassess the estate’s value, which can delay the process.
The overall assessment timeline can vary significantly, taking anywhere from a few weeks to several months, depending on the estate’s complexity and the accuracy of the initial submission.
Why Accurate Valuations Are Crucial for Estate Duty and the REV 246
The SARS REV 246 hinges on property valuations and other asset values. If these are inaccurate, the following may happen.
- SARS may reject the form or flag the estate for audit.
- The estate’s finalisation may be delayed.
- Penalties may apply.
Partnering with experienced valuation professionals ensures smoother processing and compliance.
At DeoCo, we specialise in guiding executors and families through the estate process, offering accurate valuations and end-to-end support for SARS submissions, including the REV 246 form.
Need help with your estate duty property valuation? Contact DeoCo today and ensure every detail is handled with precision.