Tax On Transfer Of Assests Between Spouses

• Published date: 16 October 2023
• Subject Matter: Tax, Family and Matrimonial, Capital Gains Tax, Wills/ Intestacy/ Estate Planning
• Law Firm: Zenas Chambers, ChimwaMurombe Legal Practice
• Author: ChimwaMurombe Legal Practice

During the course of marriage or as a result of divorce spouses and former spouses are likely to transfer assets to each other. Most assets do not attract capital gains tax as they are not specified for example assets such as shares in companies and immovable properties. In terms of section 16 of the Capital Gains Tax Act [Chapter 23:01], capital gains tax (CGT) is deferred where any specified asset is transferred between spouses or a principal private residence is transferred to a former spouse in compliance to a court directive. By deferment what is meant that tax will only be paid when the asset is disposed to a third party. Spouses refer to persons married in terms of the Marriages Act and it still remains to be seen if the term spouses will apply to couples in a life partnership in terms of property division made by a court.

It is important the benefit be claimed at the time the person making the election is submitting the CGT return for the assessment of their capital gain otherwise the benefit will be lost. To benefit from section 16 of the stated act the following requirements must be met ;

1. That the ownership of any specified asset is being transferred from a person to his or her spouse; or
2. That a person is transferring their ownership of a specified asset which is their principal private residence to their former spouse in compliance with an...