On your death, your investments in a tax-free savings account will be added to your estate and become subject to estate duty, the 2014 Taxation Laws Amendment Bill released this week proposes.
While the tax-free savings account is held within the estate, the returns from the investments will continue to be exempt from income and dividends tax and your estate will not be liable for capital gains tax when the investments in the account are disposed of on your death, it says.
Investments within a tax-free savings account cannot be transferred from one individual (or his or her estate) to another (a beneficiary). A beneficiary can inherit the savings and then transfer them to his or her own tax-free savings account, but this will be regarded as that beneficiary’s contribution to the account, and subject to his or her annual and lifetime limits.