South Africa Restricts Inter-Spousal Tax Exemption

The National Treasury has limited donations tax exemptions to prevent residents from reducing exit tax liabilities.

Updated on Oct. 27, 2026 in Taxes

Bold flat-color editorial illustration featuring a heavy metal stamp, evoking the firm nature of fiscal regulatory policy changes. — The South African National Treasury has restricted inter-spousal donations tax exemptions effective February 2026 to curb asset shifting and protect the tax base. AI Illustration. Upload story photo >

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Should the government restrict tax-free asset transfers between spouses to prevent tax avoidance?

The South African National Treasury has tabled a legislative amendment restricting the inter-spousal donations tax exemption, effective from 25 February 2026. This change targets arrangements where taxpayers transfer assets to non-resident spouses to lower exit tax liabilities.

Why it matters

The measure addresses tax avoidance strategies where individuals use staggered residency cessation to shift assets before triggering exit taxes. By limiting rollover relief for non-resident spouses, the Treasury aims to secure the domestic tax base.

The amendment specifically targets Section 9HB(6) of the Income Tax Act to restrict rollover relief for transfers to non-resident spouses. This aligns with existing provisions under Section 56 for donations and Section 9H regarding exit tax disposal.

The players

National Treasury

The South African government department responsible for managing the nation's public finances and tax policy development.

The details

Taxpayers previously utilised staggered residency cessation, where one spouse becomes a non-resident before transferring assets, to leverage the inter-spousal donation exemption. Proposed section 9HB(6) now blocks this relief when the receiving spouse is not a South African tax resident.

25 February 2026: The legislative amendment became effective for all applicable donations.
February 2026: The National Treasury initially announced the proposed tax amendments.
21 October 2026: The legislative amendment was officially tabled in the Medium-term Budget Policy Statement.

Market Dynamics

This amendment marks a tightening of the Income Tax Act to close loopholes regarding the movement of assets. It reflects a broader trend of authorities standardising tax residency rules to prevent base erosion during cross-border transitions.

Taxpayers planning to emigrate or change tax residency must now account for potential donations tax on asset transfers that were previously exempt. Financial planning strategies relying on inter-spousal transfers to non-residents will require adjustment to remain compliant.

The takeaway

Taxpayers should review their asset transfer plans if they or their spouses are considering changes to their tax residency status. Consulting with a tax professional is essential to navigate the updated restrictions on spousal rollovers and exit tax requirements.