IRAS: How to calculate estate duty

Estate duty

Estate duty has been removed for deaths on and after 15 Feb 2008.

For deaths before 15 Feb 2008.

The following items are to be considered when calculating estate duty:

Place of domicile of the deceased
- If the deceased died domiciled in Singapore
- If the deceased died domiciled outside Singapore
Reliefs and Exemptions
Funeral Expenses and Debts
Tax Rates and Interest
Examples on Computation of Estate Duty Payable

If the deceased died domiciled in Singapore

Estate Duty is payable on the total market value of

All Singapore assets (both immovable and movable) and
Movable assets outside Singapore.

Land and buildings (immovable property) outside Singapore are not subject to duty in Singapore.

The following gifts made by the deceased during his lifetime are subject to estate duty:

A gift made within five years before his death
A gift, whenever made, is subject to estate duty if the donee (recipient) did not possess and enjoy the gift immediately to the entire exclusion of the donor
A gift for public or charitable purposes is made twelve months before his death

Exceptions:
The following gifts made by the deceased during his lifetime are not subject to estate duty upon his death:

A gift made on or after 01 Jan 1999 to the Singapore Government or approved Institution of Public Character (IPC)
A gift of money or other gift (approved by the Minister) made on or after 01 Apr 1987 to an approved museum

If the deceased died domiciled outside Singapore

Deaths before 01 Jan 2002	Deaths on or after 01 Jan 2002
Estate duty is payable on the total market value of all his Singapore immovable and movable assets as at the date of death and exemptions will be given.	No estate duty is payable on his movable assets in Singapore. Only his immovable property in Singapore is subject to estate duty but it still qualifies for the exemption threshold of S$9 million.

Reliefs and Exemptions

Quick Succession Relief (QSR)

When 2 persons died on or after 01 Jan 2006, and the later death occurred not more than 24 months after the earlier death, the estate of the later death is entitled to QSR. Where the order of the 2 deaths is unknown, the younger person is presumed to have survived the older person and inherited the older person's assets. Each estate is assessed separately and the exemptions under the Estate Duty Act will apply separately on each assessment. For all quick succession deaths, a relief of varying amount would be given depending on the time period between the two deaths, as shown in the table below.

Relief for deaths in quick succession
Period between two deaths	Percentage of relief
6 months or less	100%
More than 6 months but not more than 12 months	75%
More than 12 months but not more than 18 months	50%
More than 18 months but not more than 24 months	25%
More than 24 months	0%

The formula for calculating the relief is

A/B x C x P

A = the assessed value of that part of the transferred property on which estate duty has been paid on the earlier death or the assessed value of the same part of the transferred property on which estate duty is payable on the later death, whichever is the lower.
B = the assessed value of the estate of the later deceased.
C = the amount of the estate duty payable on the deceased.
P = the percentage of remission at the applicable rate set out in the above Table.

Exemptions

The following exemptions are listed below:

Assets	Exemption Threshold	Other Information
a) Dwelling houses	$9 million*	Used wholly for residential purpose by any person regardless of whether the property is let out or owner occupied. For deaths occurring on or after 25 Feb 2000, dwelling houses used partly for the following activities also qualify for exemption: Small business activities allowed by URA or HDB under their respective guidelines. Home Office approved by HDB or URA
b) All other assets (including CPF balance) #	$600,000*	Egs. Bank account balances, shares, commercial and industrial properties, and vacant land etc.
c) If the CPF balance exceeds $600,000	The excess of $600,000*	See FAQ on CPF
d) Gifts specified in the deceased's Will (bequests) made to Singapore Government or approved IPC**after death	Value of gift	For deaths occurring on or after 01 Jan 1999
e) Gifts, not specified in the deceased's Will, made to the Singapore Government or any IPC** on or after 01 Jan 2002	Value of gift	Submit a written notification from the IPC** before the issue of a Notice of Assessment.

* The exemption threshold is applicable for a person dying on or after 28 Feb 1996
** Institutions of Public Character

Funeral expenses and debts

For deaths occurring on or after 01 Jan 2005, the amount allowed for funeral expenses is $6,000 or the actual amount expended, whichever is lower.
Debts are allowed for deduction if they are:
1. outstanding as at the date of death;
2. incurred by the deceased for his own use and benefit and
3. not reimbursable from another source
Debts are deducted against the value of the asset that is pledged as security. For example, a mortgage loan of a property shall only be deducted against the value of the property regardless of whether the property is exempt from Estate Duty.

Tax rates and interest

After deducting allowable debts, funeral expenses and exemptions, the net value will be taxed based on the following rates:

Deaths occurring on or after 28 Feb 1996	Tax Rates
For every dollar of the first $12 million	5%
For every dollar exceeding $12 million	10%

Interest on Estate Duty

Simple interest is payable on the unpaid estate duty from the date of death to the date of payment. At any time after the deceased's death, the executor, the administrator, or the accountable person may estimate the amount of estate duty payable and make payment to the Commissioner to prevent further interest from accruing.

Interest rates for deaths occurring on or after 01 Jan 2005
For the first 6 months from date of death	0%
From the date 6 months after the date of death to the - (a) date of receipt of an estate duty return without omission of assets; (b) date of notice of assessment; (c) date of full payment of the estate duty; (d) expiration of 18 months from the date of death, whichever first occurs.	6% per year on the amount of the unpaid estate duty *
From the date 18 months after the date of death to the - (a) date of receipt of an estate duty return without omission of assets; (b) date of notice of assessment; (c) date of full payment of the estate duty, whichever first occurs.	12% per year on the amount of the unpaid estate duty *

Interest rates for deaths occurring on or after 01 Jan 2005

For the first 6 months from date of death

From the date 6 months after the date of death to the -

(a) date of receipt of an estate duty return without omission of assets;
(b) date of notice of assessment;
(c) date of full payment of the estate duty;
(d) expiration of 18 months from the date of death,

whichever first occurs.

6% per year on the amount of the unpaid estate duty *

From the date 18 months after the date of death to the -

(a) date of receipt of an estate duty return without omission of assets;
(b) date of notice of assessment;
(c) date of full payment of the estate duty,

whichever first occurs.

12% per year on the amount of the unpaid estate duty *

*The Commissioner may reduce the interest rate to a rate not less than the prevailing prime lending rate of banks in Singapore, if he is satisfied that there was reasonable cause for:

not filing an estate duty return without omission of assets, or
delay in filing the estate duty return or furnishing information.

Interest rates for deaths occurring on or after 01 Jan 1999 to 31 Dec 2004
For the first 6 months from date of death	3% per year on the amount of the unpaid estate duty
For the subsequent 12 months	6% per year on the amount of the unpaid estate duty
From the expiration of 18 months to the date of payment	12% per year on the amount of the unpaid estate duty (If the Commissioner is satisfied that there was reasonable cause for the delay in payment or furnishing information, he shall reduce the rate to 6% per year)

For deaths occurring on or after 01 Jan 2005, a late penalty shall be added if any estate duty or interest is not paid in full on or before 30 days after the date of the notice of assessment.

Examples on computation of Estate Duty payable

Example 1

Assets	Value as at 03 Mar 2006 (Date of Death)
1) Shares 2) Bank accounts 3) Insurance policies 4) CPF balance 5) Dwelling house	$ 200,000 150,000 300,000 50,000 250,000
	$ 950,000
Unpaid mortgage housing loan as at 03 March 2006	$121,000
Computation of Estate Duty payable
Dwelling house ($250,000 less $121,000) Less Exemption	$129,000 $129,000
	NIL
Total value of other assets (total of items 1 to 4)	$700,000
Less Exemption Less Funeral Expenses	600,000 6,000
Net value	$ 94,000
Estate duty payable on $94,000 @ 5% = $4,700 (not including interest)

Example 2

Assets	Value as at 03 Mar 2006 (Date of Death)
1) Shares 2) Bank accounts 3) Insurance policies 4) CPF balance 5) Dwelling house	$ 200,000 150,000 300,000 750,000 250,000
	$ 1,650,000
Unpaid mortgage housing loan as at 03 Mar 2006	$121,000
Computation of estate duty payable
Dwelling house ($250,000 less $121,000) Less Exemption	$129,000 $129,000
	NIL
CPF balance Less Exemption	$ 750,000 600,000
Excess CPF balance Less Exemption in excess of CPF balance	$ 150,000 150,000
	NIL
Total value of other assets (total of items 1 to 3)	$650,000
Less Funeral Expenses	6,000
Net value	$ 644,000
Estate duty payable on $644,000 @ 5% = $32,200 (not including interest)

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