DIVORCE OF SPOUSES

Separating assets at the time of divorce also has capital gains tax implications for the parties to the divorce.
 
There are roll-over provisions applicable to spouses who are divorced or separated provided that certain legal formalities are complied with. These are summarised in the table below.

Legal formalities for divorce

​Type of marriage Legal formalities required for tax-free roll-over
​Marriage or customary union recognised under the laws of the republic ​Divorce order
​Religious marriages Agreement of division of assets which has been made an order of court​ ​
​Permanent same sex or heterosexual unions
 
Non-resident spouses and anti-avoidance

There is an anti-avoidance measure that prevents a tax-free roll-over to a non-resident spouse except in the case of
  • immovable property situated in South Africa or any interest or right of whatever nature to or in such property including rights to variable or fixed payments as consideration for the working of, or the right to work mineral deposits, sources and other natural resources; or
  • any asset effectively connected with a permanent establishment in South Africa.

Since the latter assets fall within the tax jurisdiction of South Africa even for non-residents, there is no need to preclude them from the roll-over relief conferred.

Click here to see an example.
 
Last Updated: 25/10/2018 2:47 PM     print this page
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