You are a registered financial adviser and on 25 October 2021, one of your clients Tandi Mguba, a South African resident, died at the age of 56. You are the executor and must calculate the estate duty liability of the estate. You have the following information:

Tandi is survived by the following persons:

• Kabu (61 years old): Tandis husband
• Blessing (36 years old): son
• Patience (35 years old): daughter

• Karabo (28 years old): son

Tandi and Kabu were married out of community of property, and the accrual system was applicable to them. You have discovered the following assets and liabilities in the estate:

• A private residence in Waterfall valued at R7 500 000. In 2019, Patience extended the house

by building an additional granny flat (with the approval of Tandi), anticipating that she and her mother would live together in the house. The improvements cost her R650 000 and represent 10% of the total value of the house.

• A sports car with a market value of R2 200 000.
• Shares in a local listed company with a market value of R2 300 000 on the date of her death. They were sold by the executor for R2 000 000 in the course of winding up the estate (there had been a sudden decline in the market).
• Paintings that she inherited from her aunt, Ramasela, five years earlier. The value of these paintings was R1 360 000 when she inherited it. Their value was R1 800 000 on the date of her death. Tandi paid estate duty of R246 000 previously. These paintings were bequeathed to Blessing.
• Tandi owned a house in England with a fair market value of R1 000 000, that was left to her

by her uncle who was a resident of England at the date of his death.

• Tandi had a small business, valued at R850 000 at the time of her death.
• Cash in bank accounts amounted to R450 000.
• Duties including the masters fees and executors remuneration of R480 000.
• Administrative fees to finalise the estate to the value of R35 000.
• Funeral and deathbed expenses incurred of R33 500.
• Property tax owing in respect of private residence of R20 500.
• Kabu has an accrual claim of R320 000 against Tandis estate.

Tandi made the following provisions in her will:

• The private residence in Waterfall is bequeathed to Patience but is subject to a usufruct in

favour of Kabu for the remainder of his life.

• The sports car is bequeathed to her son Karabo.
• The paintings she inherited from her aunt are bequeathed to Blessing.
• Tandis small business is bequeathed to Blessing, provided that the net profits of the business

for the next five years will accrue to Kabu, after which it will accrue to Blessing.

• An amount of R100 000 was bequeathed to a disadvantaged school in Tembisa, that is a

registered public benefit organisation.

• The surplus in the estate must be divided equally between her three children.

QUESTIONS:

1. Calculate the estate duty payable by Tandis estate.