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Thread: SARS Business valuations?

  1. #1
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    SARS Business valuations?

    I need to find out how SARS value a business for claiming their Estate Duty once the owner dies. I know there are many different ways of doing it,but which way do SARS use?

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    No expert on this, but doesn't it simply depend on how much the estate actually receives in cash?

    The Business is a separate entity and has not died and so must either be sold to someone else or wound up.

    If the business is sold, then its the sale price which will enter the estate (and possibly capital gains).

    If the business is wound up and liquidated, then its the amount that goes to the shareholder after all debts have been paid off.

    Thats my laymans view.

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    Thanks for your reply.As far as I know there are two parts to this,correct me if I am wrong:

    1.If your spouse passes away then the 'death duty' is deferred to the surviving spouse and then obviously the kids or whoever is next in line pays the 20 or 25%.

    2.If your spouse passes away then the 3.5% Executors fee is for the whole estate including the business.

    I have had several opinions on this and would like to clarify so that I don't get caught up in paying money out that we don't need to.

    Regards
    Rory
    Last edited by roryf; 17-Aug-10 at 04:08 PM. Reason: Mistake

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    From my vague knowledge of the topic that sounds about right.

    Although I still maintain that the estate won't "own" the business, so its not directly part of the calculations. The executor will sell the shares in the business or wind it up. The proceeds of this is what enters the estate and is used to calculate estate duty and CGT.

    However I wait for a more learned response from someone with experience in the matter.

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    [.

    Quote: Although I still maintain that the estate won't "own" the business, so its not directly part of the calculations.

    from my very little knowledge above is very dependent on how the deceased is "separate" from the business. if it is a sole proprietorship then the estate would certainly own the business. one would have to know the relationship of the deceased to the business.

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    Quote Originally Posted by flaker View Post
    from my very little knowledge above is very dependent on how the deceased is "separate" from the business. if it is a sole proprietorship then the estate would certainly own the business. one would have to know the relationship of the deceased to the business.
    Very good point Flaker. This brings up another area where a sole prop may be a bad idea. All the "business" assets are added to your estate which may increase the executor fee and estate duty. If it was in a separate entity, then only the nett assets would enter the estate.
    Last edited by Dave A; 22-Aug-10 at 08:32 PM.

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    This would be based on a PTY Ltd,so it would be the value of the shares I guess.

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    A Business Valuation (or stock valuation) is an appraisal that determines the fair market value of a business enterprise or its equity. Fair market value represents the price at which a willing buyer and a willing seller, both being informed of the relevant facts about the business, could reasonably conduct a transaction, neither person being under compulsion to do so.

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