In terms of section 9(1 )(e)(i) of the Transfer Duty Act 40 of 1949 transfer duty is not payable on land acquired by virtue of ab intestatio or testate succession. However, as from 21 June 1989 said exemption is only afforded in respect of assets acquired from the deceased.
The effect of the said amendment is that transfer duty is payable in deceased estates on acquisition of land based on a redistribution agreement, and also on acquisition of land after massing.
The purpose of this article is to caution deeds examiners and practitioners against the potential evasion of transfer duty in redistributions involving a surviving spouse in a joint estate, and in massed estates where the mode of massing follows the so-called common law massing.
In common law, massing the surviving spouse who has adiated to massing ends up acquiring the massed estate, unlike in statutory massing where the massed estate ends up with the heirs.
Where in a joint estate the share of the deceased not vest in the surviving spouse but vests in the heirs who together with such surviving spouse enter into a redistribution agreement in terms of which the surviving spouse eventually acquires the said share, such acquisition is not from the deceased. but from the heirs. It therefore goes without saying that:
Transfer of such share attracts transfer duty because it is not acquired from the deceased, but from the heirs.
Transfer of such share may not be effected by a section 45(1) application procedure, but by a formal deed of transfer because it is not acquired from the deceased, but from the heirs.
The title deed will be endorsed with a section 3(1)(v) endorsement above the ordinary "transferred endorsement".
In a joint estate where common law massing has occurred with adiation from the surviving spouse, it can also be argued that section 45(1) does not find application. With regard to payment of transfer duty on acquisition of the massed estate by the surviving spouse, it may be argued that the said should be levied on the whole massed unit.
A contentious issue and readers' responses will be appreciated - Editor
Republished with permission from SA Deeds Journal