Important tax change for married couples in South Africa
The National Treasury has published a draft bill that limits the donation tax exemption between spouses where the receiving spouse is a non-resident for tax purposes.
Under the 2026 Draft Taxation Laws Amendment Bill (TLAB), couples can no longer transfer unlimited assets tax-free if one spouse is no longer a South African tax resident.
“This avoidance arrangement enables the tax-free transfer of wealth offshore, undermining the policy intent of both the inter-spousal exemption and the Capital Gains Tax regime, and resulting in an erosion of the South African tax base,” said Treasury.
The National Treasury has proposed drawing a residency line through the inter-spousal donations tax exemption. However, it has not proposed abolishing the interspousal donation tax exemption altogether.
The inter-spousal donations tax exemption is a specific tax rule in South Africa that allows legally married couples to give money, property, or other assets to each other without incurring tax.
Under Section 56(1)(b) of the South African Income Tax Act, these transfers are entirely exempt from the standard 20% to 25% donations tax that usually applies to large gifts.
However, the new draft TLAB Bill would amend section 56(1)(a) and (b) of the Income Tax Act so that a donation to or for the benefit of a spouse qualifies for the exemption only if that recipient spouse is a South African tax resident.
This means that if a resident spouse makes a donation to a non-resident spouse, the resident spouse will no longer be permitted to claim the unlimited spousal exemption.
The donations tax, which is subject to the remaining exemptions and valuation rules, could be levied at 20% on cumulative donations up to R30 million and at 25% thereafter.
The draft proposal has not been enacted and could change throughout the legislative process, but is drafted to take effect from 25 February 2026. Public comments on the draft bill will close on 28 August 2026.
Tax Consulting SA explained that this new law is applicable to a limited number of high-net-worth emigration cases.
Closing the loophole
The government claims that couples who were giving assets to non-resident spouses were completely avoiding Capital Gains Tax (CGT).
However, Tax Consulting SA argued that this is not the case, as Section 9HB requires couples to pay CGT immediately if they make certain donations to a non-resident spouse.
Tax Consulting SA highlights the two different taxes, Section 9HB and Section 56.
Section 9HB determines whether CGT is owed on the growth of the asset, whereas Section 56 determines whether a spouse owes Donation Tax just for making the donation.
If the new law passes, then donating an asset to a non-resident spouse will require both taxes at the same time.
Tax consulting has emphasised the reality of emigration, noting that couples often leave at different times. One spouse may depart first for employment while the other remains to manage logistical arrangements.
While the government does not seek to restrict couples from emigrating simultaneously, it aims to prevent these couples from transferring large sums of money to the spouse who has already left first.
Tax Consulting provides six suggestions for couples with cross-border assets or different residency timelines.
Couples with cross-border assets or different residency timelines should now:
- “Confirm the correct residency chronology. Determine each spouse’s status under South African domestic law and any applicable Double Tax Agreement on the precise date of each transfer.
- Review transfers made from 25 February 2026. This should extend beyond obvious gifts to shares, investment portfolios, loan waivers, funding arrangements and other gratuitous disposals of property.
- Analyse each tax separately. The donations tax exemption, section 9HB rollover and section 9H exit charge must not be collapsed into a single conclusion.
- Preserve evidence and valuations. Contemporaneous documents should explain the asset, its market value, the commercial or matrimonial purpose of the transfer and the parties’ residency positions.
- Reconsider further transfers before implementation. Last-minute transfers driven primarily by tax, particularly when lacking clear estate-planning, matrimonial, or commercial substance, are likely to attract greater scrutiny.
- Prepare for compliance if the proposal is enacted. Potential declarations, payment dates and cash-flow exposure should be modelled early rather than addressed only after SARS raises a query.”
Tax Consulting suggested that SARS should tax any transfers made after the exact departure dates of each spouse.
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