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Great news: There's no capital gains tax for transfers of assets between spouses!

by , 03 June 2015
While you're supposed to pay capital gains tax when you sell an asset, there are several situations that the law established as exceptions from the rules.

These aresituations when it's considered unfair for you to pay capital gains tax on the disposal of your asset if you're not getting instant financial gain.

And this include the tax-free transfer of assets between spouses.

Today, we'll see how it works!

Why asset transfers between spouses doesn't attract CGT

Keep in mind that transactions between spouses, as defined in Section 1 of the IT Act, are also tax-free. You can roll-over the base cost of the transferred asset to your spouse. You'll only have to account for the capital gain/loss when the asset is transferred to a third party.

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If you transfer an asset to your spouse, you must treat her as having received the asset:

•  On the same date you purchased the asset; and
•  At the same base cost you acquired the asset for.
She must also have used the asset the same way you used it in before the disposal

Keep in mind that if you transfer an asset to your spouse because of a divorce order, or if there's an agreement in place to divide the assets through a court order, then it's assumed that there's been a disposal.

Notice that the roll-over relief doesn't apply where assets are transferred to non-resident spouses unless the assets are transferred by order of court, or the asset is an immovable asset.

By non-resident we mean someone who isn't a resident in South Africa. That means they either live overseas, or aren't a South African citizen

Keep these rules in mind so that you know the situations when you don't have to pay CGT!

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