Couples money sharing and saving - Tax implications

[Friedpet]

I frequently move money between me and my wife's accounts - mostly to put in our home loan (registered in both our names) and then back into her account to cover her expenses (more so while she was on maternity leave).
Is there any tax implications in this? Could Sars see this as income?

 

[Sinbad]

I dunno, but I think the whole married couple taxation thing is crazy. They need to change the system - add both partners' salaries and tax at doubled thresholds.

 

[Sumen]

I frequently move money between me and my wife's accounts - mostly to put in our home loan (registered in both our names) and then back into her account to cover her expenses (more so while she was on maternity leave).
Is there any tax implications in this? Could Sars see this as income?

I highly doubt it , it's not income , you Just transfering ,income tax comes out before you receive your income.

 

[SauRoNZA]

You have proof of where the money comes from and goes to and SARS knows you are married so no it’s not taxable.

But why not just put it directly in the home loan?

More so why not just share an account?

 

[The_MAC]

I dunno, but I think the whole married couple taxation thing is crazy. They need to change the system - add both partners' salaries and tax at doubled thresholds.

What about partners? What happens when people get divorced, who will track that?

People will opt to not get married for that reason alone.

 

[Cius]

It only matters when you are earning interest, not paying it. So for instance if you get to the stage in your life where you earn enough interest to pay tax on that interest (there is a level where it kicks in) then you will want to start splitting the investments across you and your wife's names as the limit applies separately to both of you. Hence to maximise the tax free amount of interest earned you need to split interest income once you pass the barrier level.

 

[Sinbad]

What about partners? What happens when people get divorced, who will track that?

People will opt to not get married for that reason alone.

Maybe antenuptial contract needs to be taken into account or something.

EG, my wife and I have accrual, so we share equally in the increase in both our net worth. I pay tax at 41%, she's not earning so pays no tax. If I earned half my salary and she earned the same, we'd both pay tax at a much lower rate and both would be better off.

 

[silkenphoenixx]

AFAIK, there's no "donations tax" between spouses, so you should be able to shuffle money back and forth as much as you like. My folks do it for years and have never had any issues, my own lovely wife usually just uses my credit card since she's a foreigner and doesn't have much by way of local accounts so it hasn't been an issue for me.

Any personal accountant would be able to answer that question with authority though.

 

[The_MAC]

Maybe antenuptial contract needs to be taken into account or something.

EG, my wife and I have accrual, so we share equally in the increase in both our net worth. I pay tax at 41%, she's not earning so pays no tax. If I earned half my salary and she earned the same, we'd both pay tax at a much lower rate and both would be better off.

Sounds like you want to give away more money to SARS..

 

[Sinbad]

Sounds like you want to give away more money to SARS..

Lol, no I don't.

Say my salary was R200k pa. Tax on that would be x.
Wife salary is zero.
If we both earned R100kpa, gross family income would be the same, but the tax on each partner would be a LOT less than x/2.

 

[The_MAC]

Lol, no I don't.

Say my salary was R200k pa. Tax on that would be x.
Wife salary is zero.
If we both earned R100kpa, gross family income would be the same, but the tax on each partner would be a LOT less than x/2.

You're right, I misread your comment..

 

[Sinbad]

You're right, I misread your comment..

Would also clarify things like - in whose hands should our AirBNB income be taxed?

 

[Archer]

Donations between spouses are tax free, no limits.

http://www.sars.gov.za/TaxTypes/DonationsTax/Pages/default.aspx

Exemptions

Section 56(1) contains a list of exempt donations which include amongst others donations between spouses and donations to approved public benefit organisations.

 

[The_MAC]

Donations between spouses are tax free, no limits.

http://www.sars.gov.za/TaxTypes/DonationsTax/Pages/default.aspx

What about between family?

When we purchased our first home my folks helped with the deposit, which we paid them back in installments "tax free"

 

[silkenphoenixx]

Would also clarify things like - in whose hands should our AirBNB income be taxed?

Whichever spouse earns the least, I should think. Unless you're both in the same tax bracket.

What about between family?

When we purchased our first home my folks helped with the deposit, which we paid them back in installments "tax free"

Donations to children or anyone else not a spouse are taxable above R100k per year. But I think SARS probably won't quibble about an interest-free loan. Your tax adviser would probably be better-equipped to comment on this. I've done it without encountering any hassle.

 

[Friedpet]

Thanks everyone for the advice.

 

[heartbroken]

Whichever spouse earns the least, I should think. Unless you're both in the same tax bracket.



Donations to children or anyone else not a spouse are taxable above R100k per year. But I think SARS probably won't quibble about an interest-free loan. Your tax adviser would probably be better-equipped to comment on this. I've done it without encountering any hassle.

Even if they did, the principal amount and repayments would just be a loan, the interest on the loan would be the "donation" the parents made to the child. The 100k donations limit would then apply on that.

 

[silkenphoenixx]

A somewhat related question - I'm paying a bond on my place at the moment, my wife isn't working and hence not earning an income. I may need to move elsewhere at some point, in which case I'd consider renting my flat out rather than selling.

Would my wife be able to rent it out and take the income herself? Or would I need to transfer the bond and property to her name in order to do that? Anyone know who I would be able to speak to to plan such a thing?

 

[rietrot]

A somewhat related question - I'm paying a bond on my place at the moment, my wife isn't working and hence not earning an income. I may need to move elsewhere at some point, in which case I'd consider renting my flat out rather than selling.

Would my wife be able to rent it out and take the income herself? Or would I need to transfer the bond and property to her name in order to do that? Anyone know who I would be able to speak to to plan such a thing?

Ownership technically depends on how you are married and how the bond is registered. It's supose to be in both your names if your married in COP.

I would just have the rental income payed into her account directly and won't even declare it or pay tax, but that's just me.
If you pay it into her account it should count as her income and most likely she will still be under the tax threshold or just pay a small amount.

 

[silkenphoenixx]

Ownership technically depends on how you are married and how the bond is registered. It's supose to be in both your names if your married in COP.

We were married overseas, which I found out translates to COP here because no ANC existed. I bought the place before I even met her though, been paying the bond for quite a while, so it's just in my name.

I would just have the rental income payed into her account directly and won't even declare it or pay tax, but that's just me.
If you pay it into her account it should count as her income and most likely she will still be under the tax threshold or just pay a small amount.

Market rates at the moment would be ~7000/m which would put her above the threshold, except if she were to claim deductions of the bond interest which is still about 4k per month. I'm just not sure whether that would be allowed with SARS since the bond is in my name. I guess I should find a tax accountant and ask these questions...