The Taxability of Insolvent Spouses Who are Married in Community of Property

• Jurisdiction: South Africa
• Citation: (2006) 17 Stell LR 105
• Published date: 27 May 2019
• Author: Roger G Evans
• Date: 27 May 2019
• Pages: 105-115

THE TAXABILITY OF INSOLVENT SPOUSES

WHO ARE MARRIED IN COMMUNITY OF

PROPERTY

*

Roger G Evans

BLC LLB LLM

Associate Professor, Department of Mercantile Law, University of South Africa

W Abrie

DCom Chartered Accountant (SA)

Professor, Department of Taxation, University of South Africa

1 Introduction

When spouses are married in comm unity of property, different

consequences attach to their marital regime under circumstances of

solvency on the one hand or insolvency of the community or joint estate

on the other hand. When the joint estate is solvent, for example,

‘‘separate estates’’ can be created from separate property in favour of the

separate spouses who are married in community of property. The

creation of a ‘‘separate estate’’ within or alongside a marriage in

community of property is recognised at common law in several statutes

and by the courts. So, for example, it often happens that a spouse who is

married in community of property inherits assets that are excluded from

his or her joint estate by the will of his or her testator. Such property is

then considered to belong to the ‘‘separate estate’’ of that heir who is

married in community of property (a ‘‘separate estate’’ can also be

created by means other than a bequest or inheritance). For the sake of

convenience, we will accept that it is the wife who is the owner of this

‘‘separate estate’’. That means that only the wife is entitled to the

property.

Another consequence that attaches to a marriage in community of

property is that of the taxability of such estate (or estates). As we will

describe below, the South African Revenue Service (SARS) is an

important role-player as a preferent creditor in the administration of

insolvent estates.

In this article we shall enquire briefly how the spouses in a marriage in

community of property are taxed under circumstances of both solvency

and insolvency. We shall also consider whether the existence of a

* The authors thank their colleagues Professors BA van der Merwe and Kathleen van der Linde of the

Department of Mercantile Law at the University of South Africa, and Mr Mc Allister of the office of

the South African Revenue Services for their comments and criticisms on earlier drafts. Of course, any

faults that remain are our own.

105

(2006) 17 Stell LR 105

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