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u The values of each respective spouse’s estate can therefore be adjusted
using this mechanism (subject to Section 7).
n Donations between spouses married in community of property
u If one spouse in a marriage in community of property makes a donation
to the other of property that forms part of the joint estate of the spouses,
it is deemed that the donation is made in equal shares by each spouse.
n Donating a usufruct
u The estate planner could donate an asset in the form of a split donation
of the usufruct and bare dominium.
u Donations tax may be payable, however no subsequent estate duty is
payable thereon.
u The way the usufruct and the bare dominium is valued for donation’s tax
purposes may be beneficial to the estate planner.
n Record the donation in an agreement and include in income tax return
u It is advisable to record the donation in an agreement, although it is not
a legal requirement that the donation be in writing (unless it is in regard
to immovable property or for donations promised for a date in the future,
known as “executory” donations).
u Both the donor and the donee should record the donation in their income
tax return in the year that the donation was made.
u Should donations tax be payable on a donation, the donor is responsible
for the payment, provided that should the donor fail to make payment
within the required timeframe, both the donor and donee are jointly and
severally liable.
n Tax avoidance schemes- Section 7 of the Income Tax Act
u Section 7 was inserted into the tax legislation many years ago to tackle
specific tax avoidance schemes.
u Section 7 specifically targets assets which are donated by a taxpayer
person to another person with the idea of avoiding tax in his own hands
on the profits derived from these assets.
Some examples:
n The taxpayer transfers an investment to his spouse (who is taxed at a lower
marginal rate than he is), in order that she be taxed on the profits of the

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