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South African couples have long been able to transfer property between spouses free of donations tax, regardless of where either spouse lives for tax purposes. A draft amendment currently before Parliament proposes to end that blanket exemption where the receiving spouse is not a South African tax resident, with an effective date reaching back to February 2026.
If you or your spouse are not both South African tax residents, or you have plans to transfer property between spouses, this is worth understanding now rather than after the fact. At PATC we have been guiding South Africans through their tax affairs for over three decades, and here is what the proposed change means.
The current exemption
Under Section 56(1)(a) and (b) of the Income Tax Act 58 of 1962, donations of property to, or for the benefit of, a donor’s spouse are currently fully exempt from donations tax. This exemption applies regardless of the receiving spouse’s South African tax residency status.
What Clause 17 proposes to change
Clause 17 of the Draft Taxation Laws Amendment Bill (2026) proposes to narrow this exemption. Under the proposed amendment, the exemption would only apply where the receiving spouse is a South African tax resident.
In practice, this means transfers of property made to, or for the benefit of, a non-resident spouse would no longer automatically qualify for the spousal exemption and would instead be subject to donations tax.
The bill is still going through the legislative process. Public comments were invited and closed on 28 August 2026, after which the proposal moves through Parliament’s ordinary consideration before it can become law. It is not yet enacted.
The proposed effective date
If the amendment is enacted as drafted, it will apply retrospectively to qualifying donations made from 25 February 2026. This means donations made between that date and the date the bill is eventually passed could fall within the new rules once it takes effect, even though the change was not yet law when the donation was made.
Current donations tax rates
Donations tax is levied under Section 54 of the Income Tax Act at the following rates:
- 20% on the aggregate value of taxable donations up to R30 million; and
- 25% on the value of taxable donations exceeding R30 million.
These are the rates that would apply to a donation that no longer qualifies for the spousal exemption under the proposed change.
Who would be affected
- South African tax residents with non-resident spouses who are planning to transfer property to, or for the benefit of, their spouse going forward.
- South African tax residents who have already made donations of property to a non-resident spouse from 25 February 2026 onward, ahead of the amendment being passed into law. If enacted with retrospective effect, these donations could become subject to donations tax.
Why the change is being proposed
The stated purpose of the amendment is to close a planning opportunity: using donations between spouses to move assets out of the South African tax net without triggering donations tax, including as a way of reducing the tax consequences that would otherwise arise from a spouse ceasing South African tax residency.
What this means for you
Because the proposed effective date sits in the past relative to when the bill will actually be passed, South African tax residents with a non-resident spouse should treat this as a live planning issue now, not something to wait on. Any property transfer to a non-resident spouse made or contemplated since 25 February 2026 deserves a proper review of the donations tax exposure it may create.
Frequently asked questions
Is this change already law?
No. It is a proposal in the Draft Taxation Laws Amendment Bill (2026). Public comments closed on 28 August 2026, and the bill must still complete the parliamentary process before it can be enacted.
Does this affect donations between spouses who are both South African tax residents?
No. The proposed change only affects donations to, or for the benefit of, a spouse who is not a South African tax resident. Donations between two South African tax resident spouses would remain fully exempt.
If I already donated property to my non-resident spouse this year, am I affected?
Potentially, if the amendment is enacted with the proposed retrospective effective date of 25 February 2026. We recommend reviewing any such transfers with your accountant.
What rate of donations tax would apply if the exemption falls away?
20% on the aggregate value of taxable donations up to R30 million, and 25% on any value above that, under Section 54 of the Income Tax Act.
What should I do while the bill is still going through Parliament?
Treat any planned or recent property transfer to a non-resident spouse as needing review. The retrospective effective date means waiting for the bill to be finalised does not remove the risk.
Let PATC review your position
If you or your spouse are not both South African tax residents and property has changed hands, or is about to, we can review the position against this proposal and the current rules and help you plan accordingly.
Call 031 702 8112 or email [email protected] to speak to our team about your tax position.
Research for this article was prepared by Rejoice Makotose, Trainee Accountant at PATC.
