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Tax Talk

Tax Talk

Author: Natalie Wocke
Date: 2014-10-10
The Taxation of Married Persons

Community of Property continued

Generally, married persons are each taxed on their own income. Special rules apply to spouses married in community of property. The provisions found in section 7 of the Income Tax Act 58 of 1962, specifically section 7(2A), 7(2B) and 7(2C) must be considered where spouses are married in Community of Property.

Having looked at Section 7(2A) and 7(2B) last week, we continue with S 7(2C), which provides that for the purpose of S 7(2A), any benefit paid to a spouse as a member /past member of a pension, provident or similar fund, or related preservation fund or fund of a similar nature will be deemed to be income from a trade. The consequence of this is that it will be taxable in that spouse's hands only. The same will apply to any annuity amount as defined in s 10A.

Where a spouse earns income as a result of being the holder of a patent, the author of a copyrighted work or as owner of a copyright by assignment, testamentary disposition or operation of law; or holds any other property or right of a similar nature, that income will be deemed to be income from a trade of such spouse, and accordingly taxed in that spouses hands.

S 56 (1)(b) provides that no donations tax shall be payable on donations between spouses. This exemption may be used to the advantage of taxpayers in legitimate tax and estate planning.

For a full consultation, make an appointment at your nearest branch of Roberts and Chaplin, in Ballito (032)586 0387 and Umhlali (032) 947 1010 for your convenience.