ACC:202

QUESTIONS: ESTATE DUTY

GROUP 4 PRESENTATION HARARE WEEKEND

GROUP MEMBERS

R1814548E RICHARD MACHINYA HACC 2.1

R195286J FELIX TATENDA MATAMBURA HACC 2.1
R192563T MAVIS MANGWIRO HACC 2.1
R123339Q SUSAN MAKUTUYA HACC 2.1
R1815497E RONALD ZIMUNHU HACC 2.1
R192744Q JOSHUA MUGADUI HACC 2.1
R1813946Q JUSTICE MUGONIWA HACC 2.1
R154088Q DIVINE KADAU HACC 2.1
R1815136X REJOYCE CHIKWANGWANI HACC 2.1
R191094Y REGIS TAONEZVI HACC 2.1
R193446Q BOTHWELL T. CHENGUWO HACC 2.1
R1814049P MIKE CHATUKUTA HACC 2.1

PROGRAM: BACHELOR OF COMMERCE ACCOUNTING HONOURS DEGREE

LECTURER: MR. CHIHAVA

DATE OF SUBMISSION: 08 MARCH 2020

DECEASED ESTATE
The deceased estate consists of the whole of property of wealth of the deceased estate. An
estate is a legal person, which is created by the operating on the law just like company or a
trust. A deceased estate begins its existence on the death of an individual and it consists of the
whole of the property of the deceased person. The estate is managed by an appointed Executor
or Administrator and is administered by the Master of High Court and it ceases to exist when the
assets have been disposed of or all liabilities paid off or when the assets have distributed to the
heirs or beneficiaries.

LEVY OF ESTATE DUTY : SECTION 3

Estate duty is charged on a person who died on or after 1 February 1968. It is not charged on a
person who dies on or after 18 April 1980 provided he has been granted heroes status.

WHAT CONSTITUTES AN ESTATE

All property of that person as at the date of his death which was acquired by that person on or
after the 1st of January 1967.
All property which is deemed to be the property of that person at the date of his death
all property of that person as at the date of his death which is defined in subsection (6) and
which was acquired by that person before the 1st January, 1967.

INCOME TAX FOR DECEASED ESTATES

When an individual dies his taxable income assessed up to the date of death and income tax is
calculated on that taxable income i.e liability for income tax arises upon the death of the
individual. After death a new taxpayer is created being the deceased estate. The taxable
income accruing after death depends on the will left by the deceased person i.e the will
determines who is to be taxed on the income after death e.g where specific assets are left to a
specific individual i.e the ascertained beneficiary then income derived from the estate will be
taxed in the hands of the beneficiary. The estate will be taxed on income constituting a residue.
The estate becomes liable to income tax where there is no ascertained beneficiary e.g where a
child to benefit has not been born therefore the estate is taxed as a person for the distribution of
assets then after that the ascertained beneficiaries will be liable to income tax.

ASSESSED LOSSES
An assessed loss incurred by the deceased person cannot be carried forward and deducted
against the income of the estate. It falls away on the death of the individual. The same applies
to an assessed loss incurred by the estate which falls away upon the winding up of the estate ie
when the assets have been distributed.

ESTATE DUTY CHAPTER 23:03 OF THE ESTATE DUTY ACT

Estate duty is levied on the property of the deceased person and this property constitutes total
possessions of the deceased person (movable and immovable property). The property consists
of:

 Fixed property: land and buildings.

 Life Assurance policies
 Liquid resources: cash at bank and at hand.
 Business interest including shares and bonds, unit trust investments and other investments.
 Debts or loans owed to the deceased.
 Deemed property for example donations made prior to the death of an individual provided
the donations are made five of less prior to the death of the individual however this will not
be the case if the done dies before the donor.

Estate duty is calculated on the basis of the following framework :-

Gross Estate xxx

Less: Allowable deductions (xxx)
Dutiable amount xxx
Duty @ appropriate rate % xxx

Gross Estate

The estate of a deceased person consists of property which was acquired on or after 1 January
1967 and deemed property.

 Any right in or to property, movable or immovable, corporeal or incorporeal and include

any right to an annuity.
 Immovable property situated in Zimbabwe.
 Movable property physically situated in Zimbabwe.
 Any debt which is secured upon immovable property by bond registered in Zimbabwe.
 Any debt recoverable or right of action enforceable in the courts of Zimbabwe.
 Any stocks or shares in any company and any stocks of the Government or of any
corporation or local authority within Zimbabwe.
 Donations
 Limited interest
 Any other property

Deemed Property

 Insurance policies
 Donations made before 1 January 1967

Deceased not resident in Zimbabwe

Where deceased was not ordinary resident in Zimbabwe at the date of death, the following are
not included in the definition of property :-

 Any right in immovable property situate outside Zimbabwe.

 Any right in movable property physically situate outside Zimbabwe.
 Any stocks or shares held by him in a body corporate which is not a company.
 Debts not recovered from Zimbabwe.
Allowable deductions

Estate duty is levied on dutiable amount, which is arrived at after deducting from the gross
property the following deductions :-

 Funeral and Death – bed expenses.

e.g hospital charges, doctor’s fees chemist charges, nursing expenses etc
However, the Master will not allow the costs of removal of the body from one country to another
nor will he allow the cost of a tombstone or other memorial.

 Debts

Debts due by the deceased persons ordinarily resident in Zimbabwe are allowed as deductions
including income tax up to date of death.

 Cost of administration
1. cost of valuations
2. cost of providing security by the executor.
3. cost of advertising for claims and advertising the executor’s account.
4. Executor’s remuneration.
5. Master’s fees
6. cost of transfer of property to the heirs
7. cost of realisation of assets sold.

 Property not situate in Zimbabwe

 Debts due to persons resident outside Zimbabwe
 Charitable bequests and donations.
 Value of family house.
 Proceeds of insurance policies where deceased left a surviving spouse.
 Family motor vehicle.

THE MASTER’S DUTIES AND RESPONSIBILITIES

 The Master shall be responsible for the administration of the Estate.

 The Master shall determine the dutiable amount.
 The Executor is responsible for submitting returns representing dutiable amount of the
Estate.
 The Master shall assess the duty payable on every Estate.
 The person liable for duty is the person to whom any advantage accrues by the death of
the deceased or the Executor in case of any other property.
ESTATE DUTY THRESH HOLD
If the taxpayer dies and leaves a spouse or a minor child then the 1 st $50 000.00 of the duty
estate is duty free and for the taxpayers who are not survived by a spouse of a minor children
the non- dutable threshold is……..
The Insurance policies are part of the dutable property however up to $20 000.00 will be
exempted from estate duty if the deceased is survived by a minor child or spouse.
In addition, insurance proceeds are allowed as a deduction to the extent that the proceeds are
allowed for the payment of the duty.

ASCERTAINED BENEFICIARY
Is a person named in the Will who acquires an immediate certain rights to claim the present and
future enjoyment accruing from an asset in the Estate? The ascertained beneficiary is taxable
immediately after the death of the deceased.

BENEFICIARY WITH VESTED RIGHTS

Means a person identified as the beneficiary to present or future enjoyment of income. He is
taxable on income distributed to him from the Trust.

BENEFICIARY WITH A CONTINGENT RIGHT

Means a person who have a right to receive income upon the happening of a certain event. The
beneficiary is taxable on income distributed to him.

REFERENCES
CAA Learning Media, Harare
Estate Duty Act 23:03
Ngorima M. and Ngwenya D. (2015) Applied Taxation in Zimbabwe
Tapera M. (2011) Taxation Principles in Zimbabwe