Tax Boffins: Foreign Inheretance Tax Implications

[RedGate]

Tax Boffins: Foreign Inheritance Tax Implications

Hey Guys

I wonder if any of you tax boffins out there can clear something up for me. What tax implications would apply on a foreign inheritance. I have read conflicting information around inheritance only affecting a trust, or that it has been done away with and that it is now considered gains of a capital nature (CGT) etc. Also, there is a difference between inheriting money locally and from abroad.

The details are as follows. I have come into an inheritance from the UK. I transferred the money from the UK, to a local bank without any problems, I just had to state and declare the nature of funds. I'm concerned about what happens next year when I file a return.

Can anyone give me any advice? Will I be taxed? Should it be declared, even if it is foreign?

I know sitting with a tax consultant would be the best course of action, but I do like the open forum where people can post advice.

Has anyone been in a similar situation?

Thanks

 

[Rockhound]

I believe inheritance is tax free as it will have already been taxed in the estate, if applicable, before it will be distributed to heirs.
It does not matter if this is local or foreign inheritance. It's tax free.
Yes, you will have to declare the inheritance on your personal tax return.
Do you have documentary proof of inheritance?
Sars will probably ask you to substantiate it, as just declaring inheritances could be used to launder money, etc.

If you have proof. No worries. NO Tax.

 

[FacELesS.]

If you inherited assets, it might be useful to note the fair value of those assets on the date you inherited them. This is because the fair value would form the base cost of the assets ito. CGT. The base cost is required to calculate the capital gain on the disposal of the asset in the future.
It can sometimes be troublesome to determine the base cost of an asset on the inheritance date, once you dispose of it in a few years' time.

 

[Faetsa]

There's no tax on inheritance because when the estate was wraped up tax was paid. I'm not sure how the UK laws work but you have the money here.

Now what you should think about is this: If the money are cash sitting in a bank you will pay tax on the interest made. Generally the first R22 800 is tax free but the rest is taxed at your average rate of tax. So the amount and your tax rate will determine that.

There are different ways to avoid or minimize tax by using different instruments. The thing is you need to know what your goals are, how much appetite you have for risk, time period and so on.

If you PM me more details I would be able to help you further.

 

[RedGate]

Thanks for the input guys. I appreciate it. I plan not to keep the money sitting in the bank for too long, as I would exceed the tax free interest ceiling pretty quickly.

Do you have documentary proof of inheritance?

I don't, but I could probably get it. Would this be from the lawyers who handled the estate?

 

[Celine]

you do not declare the inheritance on the tax return.

 

[Rockhound]

you do not declare the inheritance on the tax return.

Please check your facts before you post.
On the ITR12 return it asks " Amounts Considered Non-Taxable"
Then " Did you receive any income that you consider non-taxable? Yes or NO"

If you mark yes a whole schedule is added to return regarding Donations, Dividends, INHERITANCES, Foreign Pension, etc.

This must be completed by the OP in regard to inheritance and is correct way it must be done. It has been like this since the 2010 ITR12 return and is also on the 2011 ITR12 return.

 

[MagicDude4Eva]

I am digging this thread out again - similar question regarding possible overseas cash inheritance. From what I have seen there seems to be no tax- or exchange-control implications (especially as an immigrant) - anyone got any recent experience? AFAIK, any estate will always by dissolved and taxed in the country of residence of the deceased and the beneficiary will not be taxed.

Will need to get clarity from accountants tomorrow...