GETTING MARRIED? HERE'S WHAT YOU NEED TO KNOW ABOUT RSA TAX
September 09, 2019
Are there wedding bells chiming in your near future? Congratulations! There is nothing we love better than the joining of two people in love. However, in between choosing your stationary, booking the venue and deciding where you should go on honeymoon, there is one more thing to consider – tax.
Walking down the aisle with the partner of your dreams is more than just a celebration with family and friends; once you sign on the dotted line there are a whole lot of legally binding implications. This is why it’s important to consider your options ahead of time.
To make things a little easier, here’s the gist of what you need to know about how marriage will affect your tax situation in South Africa. In RSA, you have the option of getting married a) in community of property, b) out of community of property without accrual, or c) out community of property with accrual. Here’s how each option will impact your tax submissions and returns.
IN COMMUNITY OF PROPERTY
This is the default state of marriage in South Africa. If you don’t enter into an antenuptial agreement with your spouse before you get married, in the eyes of the law you will be married in community of property. You can have it changed later on, but it can take a long time and there will be a bunch of legal fees involved – rather address it ahead of time.
What this means is that you are seen as equal partners in an estate by the law. You will each pay tax on your income and other work-related benefits such as travel allowances, but when it comes to tax on investments or capital gains, you will each pay half. As such, you will each submit your full income on your return, and SARS will do the work of taking 50% of each. This also applies when you sell your house, or another large asset.
The main issue with this option is that when one partner dies, the estate has to be managed by an executor and fees will be determined according to the gross value of your joint estate as set out in your will. Speaking of wills, if you don’t have one already, MiWayLife now offers will services – get in touch to learn more about their excellent offer.
OUT OF COMMUNITY OF PROPERTY WITHOUT ACCRUAL
This marriage option requires an antenuptial agreement. If you choose to do so without accrual, you will each leave with what you had, as well as anything you gained during the marriage, if you should divorce. In terms of SARS, you will each be taxed separately. The same goes for liabilities, so one partner's creditors cannot come knocking at the other's door.
OUT OF COMMUNITY OF PROPERTY WITH ACCRUAL
When you add accrual to the mix, there is one added element. If your marriage should end in divorce, the partner who enjoyed the largest growth in their assets will be liable to pay the other party half the difference as compensation.
So, there you have it. That’s the tax implications of marriage in a nutshell. Keep an eye on the blog in coming weeks and months for more expert advice on making wise choices legal and financial choices for your relationship. In the meantime, have fun planning your wedding! Drink in every moment so you may treasure the memories for a lifetime.
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