Is the donations tax exemption is the same whether spouses are married ANC or COP?

Author: SAIT Technical

Q: I understand donations between spouses are not taxable (no donations tax). The husband wishes to donate his half of fixed property to his wife. When property was bought were married in community of property (COP). The fixed property is in both their names. They then divorce and later remarried with an antenuptial contract (ANC). After the husband donated his half of the property to the wife, she will own 100% of the fixed property.

Please confirm if the donations tax exemption is the same whether spouses are married ANC or COP.

A: Section 56(1) of the Income Tax Act provides that donations tax is not be payable in respect of the value of any property which is disposed of under a donation: 

(a) to or for the benefit of the spouse of the donor under a duly registered antenuptial or post-nuptial contract or under a notarial contract entered into as contemplated in section 21 of the Matrimonial Property Act, 1984 (Act 88 of 1984);

(b) to or for the benefit of the spouse of the donor who is not separated from him under a judicial order or notarial deed of separation;

The facts provided are not clear.  You state that the property was registered in both their names and we assume that this changed as a result of the divorce.  

As SAIT’s service is limited to guidance we can’t confirm as you require.  If the donation meets the above the exemption is available.  There is no transfer duty exemption.  

Section 56(1)((a) and (b) make no reference to COP or ANC.  It applies when the property is donated to a spouse.  The word spouse is defined in section 1(1).  The definition refers to in community of property, but doesn't make it a requirement for the donations tax exemption.

Disclaimer: Nothing in this query and answer should be construed as constituting tax advice or a tax opinion. An expert should be consulted for advice based on the facts and circumstances of each transaction/case. Even though great care has been taken to ensure the accuracy of the answer, SAIT do not accept any responsibility for consequences of decisions taken based on this query and answer. It remains your own responsibility to consult the relevant primary resources when taking a decision.