A critical analysis of alternatives for estate duty from a South African viewpoint

Abstract

Estate duty (or estate tax, as it is sometimes called) has been abolished in nine countries including Canada, Australia, New Zealand and Sweden which are members of the Organisation for Economic Co-operation and Development (OECD) (Page, 2009:293). Estate tax has also been temporarily abolished in the United States of America for deaths after 31 December 2009 and before 1 January 2011. Some argue that the United States will also permanently abolish estate tax or replace it with some other form of wealth transfer tax such as inheritance tax (Batchelder, 2007:5-54), accessions tax (Dodge, 2009:997-1062), inclusion-in-income approach (Dodge, 1978:997-998; Pareja, 2008:841-897), a deemed realisation approach (Dodge, 2001:423-553) or even reinstate the estate tax after this one-year repeal period (CCH, 2010:9-10). Although studies about these alternatives to estate duty have been performed internationally, no recent study could be identified as to the most suitable wealth transfer tax system for South Africa. This study investigated alternatives to estate duty for South Africa and concluded that estate duty should be abolished in South Africa. It is suggested that only capital gains tax should be levied at the time of death. AFRIKAANS : Boedelbelasting is in nege lande wat lede is van die Organisasie vir Ekonomiese Samewerking en Ontwikkeling (OESO), insluitende Kanada, Australië, Nieu-Seeland en Swede, geskrap (Page, 2009:293). Boedelbelasting is ook tydelik in die Verenigde State van Amerika vir sterftes na 31 Desember 2009 en voor 1 Januarie 2011 herroep. Sommige is van mening dat die Verenigde State ook boedelbelasting permanent sal skrap, of dat dit vervang sal word met ’n ander vorm van belasting op die oordrag van welvaart soos erfenisbelasting (Batchelder, 2007:5-54), aanwinstebelasting (Dodge, 2009:997-1062), ’n insluiting-by-inkomste metode van belasting (Dodge, 1978:997-998; Pareja, 2008:841-897), ’n geagte realisasie metode van belasting (Dodge, 2001:423-553) of selfs dat boedelbelasting na hierdie een-jaar herroepingsperiode heringestel sal word (CCH, 2010:9-10). Alhoewel studies oor die alternatiewe vir boedelbelasting internasionaal gedoen is, kon geen onlangse studie geïdentifiseer word oor die mees gepaste stelsel vir die belasting van oordrag van welvaart in Suid-Afrika nie. Hierdie studie ondersoek alternatiewe tot boedelbelasting vir Suid-Afrika en maak die gevolgtrekking dat boedelbelasting in Suid-Afrika geskrap moet word. Daar word aanbeveel dat slegs kapitaalwinsbelasting op die datum van dood gehef moet word.