IN COMMUNITY OF PROPERTY:
If you are married in community of property, this means that current and future assets are shared equally.
The law regards you as equal partners in an estate. You pay your own tax on your salary and bene
fits like travel allowances, but each pays half of the tax on investments and capital gains. Both of you declare the full income on your tax return and SARS takes 50% from each. Just be sure to tick the box that says you’re married in community of property, or you’ll both be taxed the full amount.
The same goes when you sell an asset like a (non-primary residence) house. The capital gain is also split for tax and both partners get the basic exemption.
OUT OF COMMUNITY OF PROPERTY:
Out of community of property requires an ante nuptial agreement to make it legally binding. If it’s without accrual, you keep what you came with and also anything you gain during the marriage. You and your partner are taxed separately on all income.
The same applies to liabilities and one partner’s creditors cannot touch the other’s income.
OUT OF COMMUNITY OF PROPERTY – WITH ACCRUAL:
In simple terms this means, what was yours before the marriage remains solely yours, However, all assets & liabilities accumulated during the marriage, are shared equally between the two spouses.
It is unfortunate that the tax man does not recognise the ‘Accrual system’ it is either In/Out of community of property, when a couple is married out of community of property with accrual system, each partner will have be taxed fully on their income they receive.
The only exception will be when the asset that is generating the income is registered under both names (irrespective of how married) of the partner(s) when the income will be split between the partners.