Marriage – The Tax Implications

tax-law-married-couplesGetting married is an exciting and important decision, and for many couples it is the most important decision they will ever make together. While tax may be the last thing on a couple’s mind when they plan their future together, the South African tax laws do apply differently to married people.

Equal Taxation

Taxpayers who were registered with the Receiver of Revenue, which predated SARS before 1994, will remember that married couples were taxed as if they were one person during the Apartheid era. Since the 1990s however, SARS reviewed their entire system, granting women the right to be taxed as individuals regardless of their marital status, in line with the new Constitution.

Today, SARS views every taxpayer within a given income category, with no difference in the tax rate between genders. However, there are tax implications for married couples which depend on how the couple is married and what assets they jointly own.

Marriage and Taxation

The biggest impact that marriage can have on your tax status comes from being married in community of property. Because couples who marry in this way share their assets and liabilities, they may both be taxed for certain income, including the following:

  • Income from investments: This includes rental income, and each spouse will be taxed for 50% of the income received.
  • Capital Gains: The gains accrued from the sale of an asset are also taxed with each spouse being billed 50% – the R1.5 million exclusion is also shared equally between the spouses.
  • Estate Duty: If one of the spouses should pass away, the other spouse will be liable for 50% of the estate duties, over and above the current R2.5 million exclusion.

Deciding on what type of legal marriage to enter into – marriage within or outside of community of property – is an important step that every couple should take to clear up taxation issues. Couples should remember that unless they sign an Ante-Nuptial Contract, they are automatically married in community of property, with the tax implications that this could bring.

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