Donations Tax and Estate Duty in South Africa: The Basics (2026/2027)

1. The Short Answer

South Africa taxes wealth when it changes hands, during your life through donations tax and at death through estate duty. Both use the same rates: 20%, rising to 25% on amounts above R30 million.

• From 1 March 2026 you can give away R150,000 a year without donations tax (up from R100,000, the first increase in years).
• On death, the first R3.5 million of a net estate is free of estate duty, and anything left to a surviving spouse is not taxed at all.
• Death is also treated as a sale of your assets for capital gains tax, with a larger exclusion of R440,000 in the year of death.

2. Donations Tax

Donations tax applies when a South African tax resident gives away money or property for nothing, or sells it for far less than it is worth. The donor pays it, not the person receiving the gift.

The R150,000 is per donor, per tax year, across all the people you give to. It is not R150,000 per recipient. Unused exemption does not carry over to the next year.

Donations tax is due by the end of the month after the month the donation takes effect, declared to SARS on the IT144 form. Late payment attracts penalties and interest.

3. Donations That Are Exempt

• Gifts to your spouse. Budget 2026 announced that, from 25 February 2026, this exemption only applies where the spouse receiving the gift is a South African tax resident, to stop it being used before emigration.
• Gifts to approved public benefit organisations (PBOs). Ask for a section 18A receipt: you may also be able to deduct the donation from your income, up to 10% of taxable income.
• Maintenance. Paying a reasonable amount for the support of a family member, such as school fees for your children or support for a parent, is not a donation.
• Gifts that take effect only on death, such as bequests in your will. These fall under estate duty instead.
• Small casual gifts by companies and trusts, up to R20,000 a year in total.

4. Worked Example: Helping a Child Buy a Home

Ruth, a widow, wants to give her son R500,000 towards a deposit in June 2026. She has made no other donations this tax year.

• Annual exemption: R150,000
• Taxable donation: R500,000 − R150,000 = R350,000
• Donations tax: 20% × R350,000 = R70,000, due by 31 July 2026

The alternatives:

• Spread it. R150,000 in June 2026, R150,000 in March 2027 (the next tax year), and so on, would cost no donations tax, but the son gets the money over several years.
• Lend it. A loan to an individual (not a trust) is not a donation. Ruth can lend R500,000 and then forgive R150,000 of it each year, using each year's exemption. Put the loan in writing.
• Both parents. If Ruth's husband were alive, each spouse would have their own R150,000 exemption, so a couple can give R300,000 a year tax-free.

5. Loans to Trusts

Lending money interest-free to a trust used to be a common way to move growth out of an estate. Section 7C of the Income Tax Act now treats the interest not charged on such a loan as a donation each year. The interest is measured at SARS's official rate of interest, which is the repo rate plus 1%.

For example, with the repo rate at 7.25% the official rate is 8.25%. An interest-free R2 million loan to a family trust creates a deemed donation of R165,000 a year. After the R150,000 annual exemption, R15,000 is taxable at 20%: R3,000 of donations tax. Above about R1.8 million at today's rates, an interest-free trust loan triggers donations tax every year, unless you use the exemption elsewhere.

6. Estate Duty

Estate duty is charged on the net value of a deceased person's estate:

1. Add up the property: homes, investments, bank accounts, vehicles, business interests, and most life policies on your life.
2. Subtract debts and costs: bonds and loans, funeral costs, executor's fees (up to 3.5% of the gross estate plus VAT unless agreed otherwise), and other administration costs.
3. Subtract bequests to a surviving spouse (section 4(q) of the Estate Duty Act) and bequests to approved PBOs.
4. Subtract the R3.5 million abatement.
5. Duty is 20% of the rest up to R30 million and 25% above that.

What is not in the estate for estate duty

• Retirement fund benefits from pension funds, provident funds and retirement annuities, and living annuity capital, which go to beneficiaries under the fund's or policy's rules
• Life policies payable to a spouse or child under a duly registered antenuptial contract, and properly structured buy-and-sell policies between business partners

The spouse roll-over

If you leave everything to your spouse, no estate duty is payable on your death, and the unused part of your R3.5 million abatement passes to your spouse. On the second death, the surviving spouse's estate can deduct up to R7 million.

7. Capital Gains Tax on Death

Separately from estate duty, SARS treats you as having sold all your assets at market value on the day you die. Any capital gain is taxed in your final income tax return, with these reliefs:

• A higher annual exclusion of R440,000 in the year of death (up from R300,000 before 1 March 2026)
• The R3 million primary residence exclusion for your home
• No CGT on assets left to a surviving spouse: they take over your base cost, and the tax is deferred until they sell or die

The CGT owed is a debt of the estate, so it reduces the amount subject to estate duty.

8. Worked Example: an Estate

David dies unmarried in 2026. His assets: a home worth R4 million (bought for R1.5 million), a share portfolio worth R3 million (base cost R1.8 million), cash of R1 million, and a retirement annuity of R2 million left to his daughter.

• CGT: the home's R2.5 million gain is covered by the primary residence exclusion. The shares' R1.2 million gain, less the R440,000 death exclusion, leaves R760,000; 40% (R304,000) is taxable. If his other income for the year puts this in the 41% bracket, the CGT is about R125,000.
• Gross estate for estate duty: R4m + R3m + R1m = R8 million (the RA is excluded)
• Less CGT (about R125,000), executor's fees (3.5% × R8m = R280,000, plus VAT of R42,000) and other costs of say R53,000: net estate about R7.5 million
• Less abatement R3.5 million = R4 million dutiable
• Estate duty: 20% × R4 million = R800,000

Had David been married and left everything to his wife, both the estate duty and the CGT on the shares would have been deferred to her death.

9. Simple Planning Steps

1. Use the R150,000 every year if you intend to help family anyway, and use both spouses' exemptions.
2. Keep a valid, up-to-date will. Dying without one means the Intestate Succession Act decides who inherits, which may not match what you want or be tax-efficient.
3. Check beneficiary nominations on retirement funds, living annuities and life policies; they sit outside your will.
4. Make sure there is cash in the estate, or life cover, to pay estate duty, CGT and executor's fees, so heirs are not forced to sell the house.
5. Get advice for larger estates. Above roughly R7 million for a couple, a fiduciary specialist or tax practitioner usually pays for themselves.

Frequently Asked Questions

Sources

Every figure on this page was checked against these official sources on 1 November 2026:

• SARS: Donations tax
• SARS: Estate duty
• SARS: Capital gains tax rates and exclusions
• SARS: Other taxes (2027 tax year)
• Moonstone: Budget 2026 changes to CGT, tax-free savings, retirement and donations