Spouses and Life Partners
There is no distinction in tax law between married couples and same sex and opposite sex life partners, they are all referred to as “spouses”.
Therefore, although it is not strictly necessary, we recommend that all life partners who are not married should swear an affidavit (we are Commissioners of Oaths, so you can get that done at our offices) to the effect that they consider themselves to be life partners and that they attach the affidavit to their Wills.
It is not necessary that the partnership survives for life, just as married couples can get divorced and terminate the relationship, so can life partners.
The most significant effects of “spouse” relate to the following –
1) If one spouse sells or donates a capital asset to the other, there is no CGT disposal. The second spouse simply steps into the shoes of the first. That is, they adopt the original spouse’s Base Cost.
2) There is no Donations Tax between spouses.
3) Assets bequeathed by the deceased to their spouse are free of Estate Duty.
4) The unutilised portion of the R3,5m exemption from Estate Duty passes from the first dying spouse to the second and can then be utilised when the second spouse dies.
Trap Since the definition of Connected Persons includes spouses and since the definition of Spouses includes life partners, then transactions between life partners will be transactions between connected persons and any tax consequences will be applied to market price rather than actual transaction price.
Trap Strangely, there is Transfer Duty upon the transfer of fixed property between spouses.
Trap If spouses are married under Antinuptial Contract (ANC) on the accrual basis and one spouse donates assets to the other, those assets are then excluded from the ANC accrual and become the sole property of the donee.
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