What is "Deemed Disposal" at Death?

In South Africa, death is treated as a Capital Gains Tax (CGT) event. When a person dies, SARS views it as if the deceased sold all their assets to their own estate at market value on the day before they died. This is known as a "deemed disposal."

This means that even if the family does not sell the property or the shares, the estate is still liable to pay tax on the growth in value of those assets since they were originally purchased.

Key Exemptions to Remember:

• The Spousal Rollover: Any asset bequeathed to a surviving spouse is exempt from CGT at the time of death. The "base cost" rolls over to the spouse, and CGT will only be triggered when the spouse eventually sells the asset or passes away.
• Primary Residence: The first R2 million of capital gain on a primary residence is excluded from CGT.
• Personal Use Assets: Vehicles (not used for business), furniture, and personal effects do not trigger CGT.
• Cash and Life Insurance: Cash in the bank and life insurance payouts to the estate do not have a base cost vs market value variance, and therefore do not trigger CGT (though they may trigger Estate Duty).