Draft Interpretation Note - Disposal of Assets by Deceased Person, Deceased Estate and Transfer of Assets between Spouses

Section 9HA of the Income Tax Act provides for the tax treatment of the assets of a person upon death, including the value that such assets are disposed at to the deceased’s surviving spouse, heirs and legatees. Section 9HA came into operation on 1 March 2016 and applies to a person who dies on or after this date.

Section 25 provides for the tax treatment of the deceased’s assets in the deceased estate and also prescribes the values of assets acquired from a deceased estate that should be taken into account by spouses, heirs and legatees. Section 25 came into operation on 1 March 2016 and applies to a person who dies on or after this date. A comprehensive discussion on the taxation of deceased estates under section 25 is outside the scope of the published draft interpretation note. Section 25 is discussed in the draft interpretation note to the extent that it applies to section 9HA.

Section 9HB provides for the tax treatment of assets transferred between spouses. Section 9HB came into operation on 17 January 2019 and ensures parity of treatment of all disposals of assets between spouses.

The insertion of sections 9HA, 9HB and the substitution of section 25 was effected with the intention to move some of the rules in paragraphs 40, 41 and 67 of the Eighth Schedule into the main body of the Income Tax Act.

The implications of donations made by a deceased estate and between spouses are not covered in the draft interpretation note.

The due date for public comment on the draft interpretation note is 10 September 2021.

Find a copy of the draft interpretation note here.

13/08/2021