Under paragraph 14 of the Eighth Schedule a disposal of an asset by a spouse married in community of property is treated as having been made –
- in equal shares if the asset forms part of the joint estate; and
- solely by the spouse making the disposal if the asset does not form part of the joint estate.
Thus if the capital gain or loss forms part of the joint estate it must be split equally between the spouses. But if it is excluded from the joint estate it must be recognised only by the spouse making the disposal.
A spouse in this situation, or perhaps a spouse married out of community of property, may well be tempted to transfer the asset to the partner with the lowest marginal tax rate in order to take advantage of that rate. However, paragraph 68 of the Eighth Schedule permits SARS to disregard that transfer if the main purpose is to reduce, postpone or avoid the payment of tax and to attribute the gain back to the partner that originally owned the asset.