Donations Tax, Estate Duty and Succession Basics

Donations tax is paid by the giver, at 20% on what you donate above the annual exemption of R150,000 (2026/27, up from R100,000 per Budget 2026). Estate duty takes 20% of your estate above the R3.5 million abatement when you die. Anything passing to your spouse is exempt from both, and a will plus correctly structured life cover removes most of the sting from a typical tradie estate.‍‌​‌​‌​​​‌​‌‌‌‌​​​‌​​‌‌‌​​‌​‌‌‍

Donations tax

Per SARS's donations tax page:

• Rate: 20% on cumulative donations up to R30 million; 25% above that
• Annual exemption: the first R150,000 you donate each year (2026/27) is tax free
• Spouses: donations between spouses are fully exempt, with no limit
• Charities: donations to approved public benefit organisations registered under section 18A are exempt, and deductible against income tax up to 10% of taxable income (keep the s18A receipt)
• When to pay: by the end of the month after the donation takes effect; the donor pays

Handing the business bakkie to your son, settling a sibling's debt, putting a deposit on a child's flat: all of these are donations if nothing comes back, and they count toward the R150,000.

Estate duty

Per SARS's estate duty page:

• Rate: 20% on the first R30 million of the dutiable estate, 25% above
• The abatement: every estate deducts R3.5 million before duty applies
• The spousal exemption: whatever you leave to a surviving spouse is fully exempt, and your unused abatement rolls over, giving the second estate up to R7 million combined

So an estate of R4 million leaving nothing to a spouse pays 20% of R500,000: R100,000. The same estate left to a spouse pays nothing now, and the survivor's estate gets the doubled abatement later.

Succession basics for a trade business

• Write a will. Without one the Intestate Succession Act decides, and the business can land with family who cannot run it, or be liquidated in a hurry to split the proceeds.
• Buy-sell agreement for partners. If two of you own the business, even informally, a buy-sell agreement backed by life policies on each other means the survivor buys the deceased's share at a fair price, instead of inheriting the heirs as co-owners.
• Point life cover at a person, not the estate. A policy paid to a named beneficiary does not form part of the dutiable estate; one paid to the estate does, and it also gets stuck in the winding-up.
• Retirement funds sit outside. Death benefits from approved retirement funds are distributed by the fund's trustees under section 37C of the Pension Funds Act and generally fall outside the dutiable estate (see Retirement Annuities and Tax).

Worked example

A tradie dies owning a house (R3,000,000), tools and vehicles (R800,000) and cash (R500,000), with a R1,500,000 life policy paid directly to the spouse:

• The policy goes straight to the spouse: not in the dutiable estate
• Dutiable estate: R4,300,000 minus the R3,500,000 abatement = R800,000
• Estate duty: 20% x R800,000 = R160,000

Had the will left the house to the spouse, the spousal exemption would remove it, the remaining R1,300,000 would sit under the abatement, and the duty would be zero. Same assets, different drafting, R160,000 difference.

Common mistakes

• No will. The single cheapest fix on this page.
• Life cover payable to the estate. It inflates the dutiable estate and delays the family's access to cash.
• Forgetting that family help is a donation. Big gifts to children count toward the R150,000 and need a donations tax return when they exceed it.
• No s18A receipt. Without it a charity donation earns neither the exemption paperwork nor the income tax deduction.

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