Technical article

South Africa: Estate Duty Reduces What the Heir Receives

PwC says the estates of non-residents are taxed on South African assets only.

By Neil Solomon · 3 min read

Picture a widow in Johannesburg who leaves everything to two sons, one living in Spain and one in Canada. Say her estate is worth ZAR 10 million (approximately US$550,000), as an example. Who pays tax, and how much do the sons receive?

In South Africa the tax is on the estate. It is called estate duty, and the sons do not pay it themselves. It is taken from what they would have received. PwC's tax summary, tier B, gives the rates:

On the example estate, the abatement covers ZAR 3.5 million. The other ZAR 6.5 million is taxed at 20%, which is ZAR 1.3 million of duty. The sons share what is left. A larger estate is taxed at 25% only on the part above ZAR 30 million.

Gifts while alive. South Africa also taxes gifts, through donations tax. The rates are the same, 20% and 25%, and the donor pays it when the donor is a South African resident. Each person has a yearly exemption of ZAR 150,000 (approximately US$8,000). Gifts between spouses are exempt.

If the person who died lived elsewhere. PwC says the estates of non-residents are taxed on South African assets only. So a house in Cape Town left by someone who lived in Spain is inside the tax. Their bank account in Madrid is not.

What counts as living there. A person is resident if ordinarily resident in South Africa, or present more than 91 days this year and more than 915 days across the previous five years. PwC notes that the statute adds a 91-day test in each of the five earlier years, which its page does not show. Residents are taxed on their worldwide income, with a top rate of 45% from ZAR 1,878,601 (approximately US$103,000) for the year to 28 February 2027.

A trust abroad that pays a South African resident. One 2019 article in a South African trade publication, which is the only source here and sits at tier U, says a capital payment from a foreign trust to a resident can be taxed as if it were income. It names section 25B(2A) of the tax act. It also says a vested capital gain of a foreign trust is taxed to a resident beneficiary. The same article says the rules changed for distributions on or after 1 March 2019. It does not give a rate.

The United States angle. The IRS lists a US estate tax treaty with South Africa, and it covers estate tax only, not gifts. It matters for a family where a US citizen dies owning South African assets, or the other way round.

You might say: "Twenty percent sounds modest." For a small estate it is nothing at all, because the first ZAR 3.5 million is outside the tax. For a larger one the duty comes out before the sons see a rand, and sons who live in Spain or Canada may meet a second tax in the country where they live. The sources here give no South African credit rule for that, so the two taxes are worth reading side by side.

You could start with where the parent is resident, where the assets sit, and whether a trust abroad is in the picture. Each of the three moves the answer.

If your family holds assets in South Africa while the children live elsewhere, what surprised you most when you first looked at how the duty works? Share it here, because someone in the same position may benefit from your story.

Figures are estimates for planning, based on public data. Date read: October 2026.