EDA recipe

Question 1

Step 1

Answer 1

Property in terms of sec 3(2) as per liquidation account = gross value of assets - property enjoyed by the deceased

Question 2

Step 2

Answer 2

Add foreign assets

Question 3

Step 3

Answer 3

Adjustments of assets in liquidation account

Question 4

Step 3(i)

Answer 4

Immovable property
Farm: (bona fide farming/farming operations/bequeathed/let)
LESS: 30% on sworn valuation or on fair market value disclosed in Liq account

Question 5

Step 3(ii)

Answer 5

Movable property
Shares in private company: (work on valuation by auditor and accepted by SARS)
LESS/ADD: difference between valuation by Auditor and the selling price thereof

LESS difference if SP is more than valuation
ADD difference if SP is less than valuation

Question 6

Step 4A

Answer 6

LESS Deemed property ito section 3(3) in liquidation account disclosed as claims in favour of the estate

Question 7

Step 4A(i)

Answer 7

All policies on life of deceased of which the maturity value are disclosed in liquidation account - because deceased did NOT enjoy the property (paid out to the estate)

Question 8

Step 4A(ii)

Answer 8

Accural claim by deceased disclosed as an asset in liquidation account - deceased did NOT enjoy the accrual claim

Question 9

Step 4B

Answer 9

LESS massing out of community or single person: value of survivor’s share

Question 10

Step 5

Answer 10

ADD limited interest enjoyed by deceased and passes on to someone else
market value X 12% X (Factor determined by age next birthday)
Fiduciary interest/usufruct
(Farm: remember to subtract 30% before doing calculation)

(FCH age @ DOD +1) - Table A to determine factor
If limited interest for fixed period use Table B

Question 11

After step 5 you get?

Answer 11

Actual value of sec 3(2) property

Question 12

Step 6

Answer 12

ADD property deemed to be property ito sec3(3) (property the deceased did not enjoy while he/she was alive)

Question 13

Step 6A

Answer 13

• All policies on life of the deceased of which the maturity value was paid out, even those paid to beneficiaries - because deceased did NOT not enjoy the maturity value
• EXCEPTIONS: policies on life of deceased excluded from estate duty (A1, B2, B4)

Policies ceded/donated to a spouse/child ito a registered ANC/PNC - A1 policy

Key man policies (if deceased was an expert in his field and the business took out a policy on his life) - B4 policy

Policies on life of deceased taken out by partners/shareholders/directors - B2 Policy

Question 14

6(b)

Answer 14

Accrual claim by deceased disclosed as an asset in liquidation account

Question 15

After step 6 you get?

Answer 15

GROSS VALUE OF ESTATE

Question 16

Step 7

Answer 16

Less allowable deductions ito section 4

Question 17

Step 7: Section 4(a)

Answer 17

Funeral, tombstone and deathbed expenses

Question 18

Step 7: Section 4(b)

Answer 18

Liabilities (claims against the estate)

Massing= survivor’s share NOT to be taken into account

Question 19

Step 7: Section 4(c)

Answer 19

Administration expenses

Massing= survivor’s share NOT to be taken into account

Question 20

Step 7: Section 4(e)

Answer 20

Foreign assets

Question 21

Step 7: Section 4(h)

Answer 21

Bequests/donations:

1. to public benefit organisations in the RSA
   OR
2. the state
   OR
3. any municipality/metro

Liquidation account =
Question paper = CASH:
Step 5 and Step 6 =

Question 22

Step 7: Section 4(IA)

Answer 22

Accrual claim by Surviving Spouse

(accrual disclosed as a liability in liquidation account)

Question 23

Step 7: Section 4(q)

Answer 23

Benefits received by surviving spouse
Liquidation account =
Question paper = CASH:
Step 5 and step 6=

Farm 70%

Question 24

After step 7 you get?

Answer 24

Net value of estate

Question 25

Step 8

Answer 25

LESS: primary rebate ito sec 4A = 3 500 000 this gives you the duitable amount

Question 26

Step 9

Answer 26

Estate duty payable @20% on duitable amount R _____

DO NOT LEAVE OUT EVEN IF NIL

Question 27

Who is liable to contribute towards the Estate Duty Payable?

Answer 27

Beneficiaries who receive benefits under no 5 and 6 that are NOT deductible ito sec 4

Question 28

What is the formula to calculate the apportionment

Answer 28

Question 29

Who will NEVER be liable to contribute towards the estate duty payable?

Answer 29

1. A surviving spouse under sec 4(q)
2. organisations in RSA sec 4(h)