- Proposed changes could make transfers between resident and non-resident spouses more expensive, putting cross-border estate planning under renewed scrutiny.
South Africa Moves to Tax Wealth Transfers. South Africa is moving to tighten the tax treatment of wealth transfers between spouses, with proposed changes that could make certain transfers to non-resident spouses subject to donations tax.
The move forms part of National Treasury’s broader effort to close tax planning opportunities linked to emigration and prevent significant assets from being moved outside South Africa’s tax net.
The proposed changes, contained in the 2026 Draft Taxation Laws Amendment Bill, would restrict the existing inter-spousal donations tax exemption where the spouse receiving the assets is not a South African tax resident.
The proposal could have significant implications for South Africans with international family arrangements, particularly high-net-worth individuals and couples planning staggered tax emigration. It also signals a growing focus by South African tax authorities on how wealth is transferred across borders when taxpayers change their tax residency status.
The tax planning strategy Treasury wants to disrupt
Under South Africa’s existing framework, transfers between spouses can generally qualify for an exemption from donations tax.
Treasury says it has identified arrangements where couples deliberately stagger their departure from South Africa for tax purposes.
The pattern is relatively straightforward: one spouse first becomes a non-resident, after which assets can be transferred from the spouse who remains resident to the newly non-resident spouse. Under the existing rules, the transfer could potentially qualify for the inter-spousal donations exemption.
The remaining spouse could then subsequently cease South African tax residency.
According to Treasury, this sequence can reduce the tax consequences associated with both the transfer of assets and the subsequent cessation of residency. The 2026 Budget Review specifically identified this practice as a concern and proposed restricting the exemption to donations made to a spouse who remains a South African resident.
In other words, the government is looking less at the marriage itself and more closely at what happens to the family’s wealth when one or both spouses cross the tax-residency boundary.
What the proposed amendment would change
Clause 17 of the Draft Taxation Laws Amendment Bill proposes an amendment to Section 56 of the Income Tax Act.
The proposed wording would limit the inter-spousal donations tax exemption where the recipient spouse is not a South African resident.
The proposal is intended to take effect retrospectively from 25 February 2026, the date of the 2026 Budget. However, because this remains draft legislation, taxpayers should distinguish between the proposed effective date and the date on which Parliament ultimately enacts the amendment. SARS notes that draft bills still have to proceed through the legislative process before becoming law.
The practical implication is significant.
A South African tax resident transferring substantial assets to a spouse who is already non-resident may no longer be able to rely on the unlimited inter-spousal exemption if the proposal becomes law.
Instead, the normal donations tax framework could become relevant.
South Africa currently applies donations tax at 20% on cumulative taxable donations up to R30 million and 25% above R30 million, with a separate annual exemption for individuals. SARS confirms that the current exemption for donations between spouses is specifically limited to cases where the recipient spouse is a tax resident.
Why high-net-worth families should pay attention
The proposed amendment is unlikely to affect ordinary household transfers in the same way as large-scale wealth transfers.
Its bigger impact could be felt by families with substantial investments, shares, properties, trusts and other assets spread across jurisdictions.
For example, a South African resident who transfers a significant investment portfolio to a spouse who has already established tax residency abroad could face a very different tax outcome if the proposed restriction becomes law.
The issue becomes even more important where the transfer forms part of a wider emigration or succession-planning strategy.
Treasury’s concern is therefore not simply about donations. It is about the interaction between:
- donations tax;
- capital gains tax;
- tax residency;
- emigration;
- estate planning; and
- cross-border transfers of wealth.
SEE ALSO: Mauritius Court Clarifies Tax Relief for Incidental Interest Income
Capital gains tax is also being brought into the conversation
The proposed changes do not stop at donations tax.
The draft legislation also proposes changes to the capital gains tax treatment of transfers between spouses.
A proposed new subsection 9HB(6) would restrict the inter-spousal CGT rollover where an asset is transferred to a non-resident spouse, subject to circumstances in which the asset remains within South Africa’s tax jurisdiction.
The proposed CGT amendment is scheduled to take effect from 1 March 2027, if enacted. This means that cross-border family wealth planning could face another layer of scrutiny beyond the proposed donations tax change.
South Africa’s broader message: leaving the country does not mean leaving the tax net
The proposed amendments fit into a wider policy direction that has become increasingly visible in South Africa.
National Treasury has been tightening rules around tax consequences arising when individuals cease South African tax residency and move assets or economic interests offshore.
The latest proposal adds another piece to that strategy by examining what happens before the final departure, particularly where family members cease residency at different times.
The policy logic is straightforward: if tax rules provide a benefit for transfers between spouses, Treasury does not want that benefit to become a mechanism for moving significant wealth offshore immediately before a taxpayer exits the South African tax system.
What taxpayers should consider
Because the legislation remains at the draft stage, taxpayers should not treat the proposal as an enacted tax rule.
However, individuals with cross-border family structures may want to review their arrangements now, particularly where:
- one spouse is already non-resident;
- one spouse is planning to cease South African tax residency;
- significant assets are expected to be transferred between spouses;
- trusts or companies are part of the family’s wealth structure; or
- estate plans involve moving assets outside South Africa.
The appropriate tax treatment will depend heavily on the nature of the assets, the residency status of both spouses and the timing of the transaction.
Africa Tax Review Analysis
South Africa’s proposal illustrates an increasingly important trend in African tax administration: tax authorities are looking beyond conventional income and transaction taxes to examine how wealthy taxpayers move assets across borders.
For governments, the challenge is balancing legitimate international mobility with preventing tax planning arrangements that can permanently remove wealth from the domestic tax base.
For taxpayers, it is a reminder that tax residency is becoming increasingly important in cross-border estate and wealth planning.
The proposed South African rules could also be closely watched elsewhere in Africa. As more high-net-worth individuals establish international lifestyles, African tax authorities may increasingly examine whether existing exemptions and rollover provisions unintentionally create opportunities for wealth to leave the domestic tax net.
The South African case therefore goes beyond married couples. It is part of a much bigger debate about how African countries protect their tax bases when capital, families and tax residency move across borders.
