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You don't have to pay capital gains tax on transfers of assets between spouses

by , 08 June 2015
While in general you have to pay capital gains tax when you sell an asset, today we present you a situation when you don't have to pay capital gains tax on the disposal of your asset.



A situation like this occurs based on the fact that you're not getting instant financial gain. And one such case is the transfer of assets between spouses which is tax-free!

Here's why…

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Why the transfer of assets between spouses is tax-free

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

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.

Now, 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.

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.

As a final note, keep in mind that a non-resident is someone who isn't a resident in South Africa. That means they either live overseas, or aren't a South African citizen.


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