SARS Estate Duty & Donations Tax in South Africa (2026/2027) — Exemptions, Abatements & Rates

Reviewed & Verified

Written by the Independent Editorial Team · Reviewed & Verified by Solly Maanaso, CA(SA)

South Africa imposes two related taxes on the transfer of wealth: estate duty (levied on a deceased person's estate) and donations tax (levied when a living person gives away property). Both are administered by SARS under separate legislation. Budget 2026 increased the donations tax annual exemption from R100,000 to R150,000 — the first increase in years.

JUMP TO: Estate duty Abatement & Rates Calculation Spouse rollover Donations tax Rates & Exemption How to pay Interaction FAQ

Part A

What is estate duty?

Estate duty is a tax on the estate of a deceased person. When a South African resident dies, SARS levies estate duty on the net value of their worldwide assets and deemed assets, minus allowable deductions. For non-residents, estate duty applies only to South African property.
Source: SARS — Estate Duty — sars.gov.za/types-of-tax/estate-duty/
Legislation: Estate Duty Act 45 of 1955

Who pays it: The estate pays — not the heirs. The executor is responsible for calculating and paying estate duty before distributing the estate.

When it applies: On the death of a natural person. It is calculated on the date of death.

What property is included: The worldwide property of South African residents (including deemed property). South African property of non-residents only.

What is "deemed property"?
Certain assets are included in an estate even if the deceased did not own them outright at death — for example, insurance policies of which the deceased was the life insured and the estate is the beneficiary.
Source: SARS — Estate Duty — sars.gov.za/types-of-tax/estate-duty/

Estate duty rates and the R3.5 million abatement (2026/2027)

Dutiable value of estate	Estate duty rate
First R30,000,000	20%
Above R30,000,000	25%

No changes 2026/2027 Rates last changed when the 25% rate above R30 million was introduced in 2018.
Source: SARS — Other Taxes — sars.gov.za/tax-rates/other-taxes/ (updated 25 February 2026)

The basic abatement
Every estate is entitled to a basic abatement of R3,500,000 deducted from the net value of the estate to arrive at the dutiable value. Estate duty is only levied on the dutiable value — not the gross estate.

This means: if the net value of your estate is R3,500,000 or less, no estate duty is payable.
Source: SARS — Estate Duty — sars.gov.za/types-of-tax/estate-duty/

Gross value of estate − Allowable deductions (liabilities, funeral costs, administration costs) = Net value of estate − Basic abatement (R3,500,000) − Bequests to surviving spouse − Bequests to approved PBOs = Dutiable value of estate × 20% (up to R30m) / 25% (above R30m) = Estate duty payable

Worked example

Gross estate (property, investments, life insurance to estate)	R6,000,000
Less: Liabilities and administration costs	(R300,000)
Net value of estate	R5,700,000
Less: Basic abatement	(R3,500,000)
Dutiable value	R2,200,000
Estate duty at 20%	R440,000

This example is illustrative. Actual estate duty depends on the full value of property, deductions, bequests, and applicable exemptions. Engage an attorney and registered tax practitioner for estate planning.

The surviving spouse — rollover of the unused abatement

South African law allows the unused portion of a deceased spouse's R3,500,000 abatement to roll over to the surviving spouse's estate. This means a married couple can effectively shelter up to R7,000,000 from estate duty across their combined estates.

Spouse A dies. Their estate is R2,000,000 net. After the R3,500,000 abatement, their dutiable value is zero — no estate duty is payable.

The unused R1,500,000 (R3,500,000 − R2,000,000) is recorded and added to Spouse B's abatement when Spouse B later dies.

Spouse B dies with an estate of R5,000,000 net. Their available abatement is R3,500,000 + R1,500,000 = R5,000,000.

Dutiable value: R5,000,000 − R5,000,000 = R0 → no estate duty payable.

Important conditions:

There must have been a predeceased spouse — the rollover cannot be claimed without a prior spouse death.
The rollover applies to the unused portion only — not a full second R3.5 million if the first estate was large.
Multiple unused abatements can accumulate if a person is widowed more than once.
The rollover does not require the first estate to have been formally reported to the Master of the High Court, though alternative evidence of the spousal relationship may be required.

Source: SARS FAQ on Deceased Estates (LAPD-IT-G31) — sars.gov.za; Estate Duty Act 45 of 1955

Bequests to a surviving spouse:
Any property that passes directly to a surviving spouse (whether by will or intestate succession) is also deductible from the dutiable value of the deceased's estate — separate from the abatement. This can further reduce or eliminate estate duty.

What is excluded from or deductible from your estate?

Always deductible from the gross estate value:

All bona fide liabilities (bonds, debts, credit cards, personal loans owed at death)
Funeral and tombstone costs
Administration costs and executor's fees (typically 3.5% + VAT of gross estate value)
Bequests to an approved public benefit organisation (PBO) — deducted from net value
Property accruing to a surviving spouse — deducted from net value

Excluded from the estate (not included as property):

Life insurance policies payable to a named beneficiary other than the estate — the proceeds go directly to the beneficiary and are generally excluded from the estate
Retirement fund death benefits paid to nominated beneficiaries — generally excluded from the dutiable estate under Section 3(2)(i) of the Estate Duty Act
Assets held in a trust (in the trustee's name, not the deceased's personal estate) — note: SARS may include loan accounts to trusts

Important — not excluded:

Life insurance where the estate is the named beneficiary
Property donated to a trust where the deceased retained effective control
Outstanding loans from the deceased to a family trust — these are claims in the estate

Source: SARS — Estate Duty — sars.gov.za/types-of-tax/estate-duty/; Estate Duty Act 45 of 1955 Section 4

How estate duty and donations tax are connected

Many South Africans ask: "Can I just give my assets away before I die to avoid estate duty?" The answer is: not without triggering donations tax — and often not effectively even with it.

South Africa's donations tax system exists partly to prevent taxpayers from depleting their estates through lifetime gifts to avoid estate duty. The two taxes work together as a system:

If you give assets away during your lifetime above the R150,000 annual exemption, donations tax applies (at 20%–25%)
If you keep assets until death, estate duty applies (at 20%–25%)
In both cases, the same tax rates apply — making the avoidance strategy ineffective for most taxpayers

This parallel rate structure means that giving assets away to avoid estate duty primarily defers the tax (to donations tax) rather than eliminating it.

Estate Duty (On Death)

First R30m 20%

Above R30m 25%

Donations Tax (Lifetime Gifts)

First R30m 20%

Above R30m 25%

One notable exception:

The R150,000 annual donations tax exemption (2026/2027) does allow for gradual tax-free gifting over a lifetime. Used strategically over many years, this can meaningfully reduce an estate — but requires consistent long-term planning.

Part B

What is donations tax?

Donations tax is a tax on the gratuitous (free) disposal of property by a South African resident. It is levied on the donor — not the recipient. The recipient receives the donation tax-free in their hands.
Source: SARS — Donations Tax — sars.gov.za/types-of-tax/donations-tax/
Legislation: Income Tax Act 58 of 1962 (Sections 54–64)

What counts as a "donation"?

A donation includes any gratuitous disposal of property or gratuitous waiver of a right. This is broader than most people expect:

Cash gifts
Gifting an asset (car, jewellery, property)
Selling property to a family member at below market value — the difference is a donation
Waiving a debt owed to you
Forgoing interest on a loan

What does NOT count:

If the recipient gives something in return, it is not a donation — it is a sale or exchange.

Source: SARS — Donations Tax

Who is liable?
The donor (the person giving) pays donations tax. If the donor fails to pay, the donee (the recipient) becomes jointly and severally liable.

Donations tax rates and annual exemption (2026/2027)

Cumulative donations (since 1 March 2018)	Donations tax rate
Not exceeding R30,000,000	20%
Above R30,000,000	25%

No change to rates for 2026/2027. The cumulative basis means all donations since 1 March 2018 are tracked.
Source: SARS — Other Taxes — sars.gov.za/tax-rates/other-taxes/ (updated 25 February 2026)

Annual exemption for natural persons

R150,000 per tax year

Budget 2026 new from 1 March 2026 (Increased from R100,000)

This means: the first R150,000 of donations made by a natural person in a tax year is completely exempt from donations tax. Donations above R150,000 in the same year are taxed at 20% (or 25% above the R30 million cumulative threshold).

For companies, trusts, and other non-natural persons: The exemption is limited to R20,000 per tax year for casual gifts only.
Source: SARS — Other Taxes — sars.gov.za/tax-rates/other-taxes/

Worked example (natural person)

Total donations in the 2026/2027 tax year	R250,000
Less: Annual exemption	(R150,000)
Taxable donation	R100,000
Donations tax at 20%	R20,000

The donor must pay the R20,000 by the end of the month following the month in which the donation was made.

Donations tax calculator →

What donations are exempt from donations tax?

Budget 2026 change

Donations between spouses

Donations between spouses are fully exempt from donations tax — there is no limit.

Budget 2026 change (from 25 February 2026): The exemption now applies only where the recipient spouse is a South African tax resident. Donations to a spouse who has already ceased to be a tax resident are no longer exempt. This change was introduced to close a specific avoidance arrangement where spouses staggered their cessation of tax residency to shift assets tax-free offshore.

Source: SARS — Other Taxes; Budget 2026 Review

Donations to approved PBOs (Section 18A)

Donations to SARS-approved public benefit organisations (charities, foundations, educational institutions) are fully exempt from donations tax.

These are the same organisations that issue Section 18A receipts for income tax deduction purposes.

Source: SARS — Donations Tax

Donations within a South African group

Donations between companies that form part of a South African group of companies (as defined) are exempt.

Source: SARS — Other Taxes

Annual exemption (Covered above)

R150,000 per tax year for natural persons (2026/2027).

R20,000 for non-natural persons.

Other notable exemptions:

Donations resulting from a court order (e.g. divorce settlements)
Donations made in terms of a moral obligation recognised in law
Waiver of rental by a landlord to a charity

Source: SARS — Donations Tax; Income Tax Act Section 56

How to declare and pay donations tax

The donor is responsible for declaring and paying donations tax. The process is straightforward but the deadline is strict — donations tax must be paid by the last day of the month following the month in which the donation was made.

Determine whether donations tax applies

Total your donations for the tax year to date
If cumulative donations remain below R150,000 (natural persons) for the year: no tax, no form required
If above R150,000: calculate the taxable portion (total donations minus R150,000)

Calculate donations tax owed

Tax = taxable donations × 20% (or 25% if cumulative donations since March 2018 exceed R30 million)

Complete the IT144 return

The IT144 (Return of Donations) must be submitted to SARS for each donation that exceeds the exemption threshold. Submit via SARS eFiling or at a SARS branch (by appointment).

Pay by the deadline

Payment must reach SARS by the last day of the month following the month of the donation.

Example: donation made on 15 April 2026 → payment due by 31 May 2026. Late payment attracts interest and penalties.

If donations tax is not paid by the donor:
The donee (recipient) becomes jointly and severally liable for the unpaid donations tax. If you receive a large donation, confirm with the donor that donations tax has been settled.

Source: SARS — Donations Tax

IT144 form — step-by-step instructions →

Frequently Asked Questions

Estate duty is levied at 20% on the first R30 million of the dutiable value of an estate, and at 25% on any amount above R30 million. These rates are unchanged for 2026/2027.

Every estate is entitled to a basic abatement of R3,500,000. This amount is deducted from the net value of the estate before estate duty is calculated. If the net estate value (after liabilities and other deductions) does not exceed R3,500,000, no estate duty is payable.

The unused portion of a predeceased spouse's R3,500,000 abatement rolls over to the surviving spouse's estate. This means a married couple can effectively shelter up to R7,000,000 from estate duty across their combined estates.

Life insurance proceeds are included in the estate if the estate is the named beneficiary of the policy. However, if the proceeds are payable directly to a named beneficiary (e.g., a spouse or child), they are generally excluded from the deceased's estate for estate duty purposes.

For the 2026/2027 tax year (1 March 2026 – 28 February 2027), natural persons have an annual donations tax exemption of R150,000. This was increased from R100,000 by Budget 2026, effective 1 March 2026. For companies and other non-natural persons, the exemption is R20,000 for casual gifts only.

Donations tax is levied at 20% on the cumulative value of taxable donations since 1 March 2018, not exceeding R30 million. Above R30 million, the rate is 25%.

Donations between spouses are generally exempt from donations tax. However, from 25 February 2026, this exemption applies only where the recipient spouse is a South African tax resident. Donations to a spouse who has ceased to be a tax resident are no longer exempt.

No. The recipient (donee) receives the donation tax-free. There is no income tax consequence for the recipient. The donor is liable for donations tax. However, the donee should declare the donation in their ITR12 as a non-taxable amount. If the donor fails to pay donations tax, the donee becomes jointly and severally liable for the unpaid tax.

Giving away assets during your lifetime to avoid estate duty generally triggers donations tax at the same rates (20%–25%). The annual R150,000 exemption (2026/2027) allows for gradual tax-free gifting, but a large-scale strategy of pre-death asset disposal replaces estate duty with donations tax rather than eliminating the tax burden. Professional estate planning advice is essential.

Donations tax must be paid to SARS by the last day of the month following the month in which the donation was made. For example, a donation made in April 2026 requires donations tax payment by 31 May 2026. The IT144 return must also be submitted. Late payment attracts interest and potential penalties.

Related guides

Estate duty & trusts

Donations tax & wealth

Retirement & compliance

Sources and references

All estate duty and donations tax information on this page is sourced from, or verified against, the following official and authoritative references:

Estate Duty Act 45 of 1955 — Primary legislation governing estate duty
Income Tax Act 58 of 1962 — Sections 54–64 (donations tax)
SARS — Estate Duty — sars.gov.za/types-of-tax/estate-duty/
SARS — Donations Tax — sars.gov.za/types-of-tax/donations-tax/
SARS — Other Taxes (rates) — sars.gov.za/tax-rates/other-taxes/

Last reviewed April 2026 by Solly Maanaso, CA(SA). Next review: after Budget Speech February 2027 — verify both estate duty rates and donations tax exemption on sars.gov.za.