Transfer of membership in a cc between spouses

[J7J]

Hi,

What are the implications (including tax implications) of transferring the membership in an operating cc from the husband to the wife? Would this transaction be completely exempt because of donations between spouses being exempt?

Kindly advise. Thanks!

[gac]

Im no tax expert however it will depend firstly on the marital contract the 2 are in.
If COP then their estate is joint and I dont think there is any tax implication.

However ANC with or without Accrual things get a bit trickier although Im fairly certain that without accrual is a situation when the 2 estates are seperate in law meaning the sale is treated the same as between 2 strangers - i.e. a tax liability could accrue to the seller.

SARS should be able to give you guidance on the matter. Look them up and send them an email query.
Good luck

[Miro Bagrov]

The change of Ownership was simply filling in a CK2 Form... amendment in ownership. Handing it in to DTI;
If you're not in Pretoria, I can hand it in for you directly to DTI: I think they wanted fifty bucks or something to process it..

You forgot to mention the VIP: married in community of property or out of community.

Good Luck.

[BusFact]

I don't see the point if married ICP. So lets work on there being an ANC.

My understanding is that spouses can donate as much as they want to each other, so a contract would be drawn up where the shares in the cc are sold for Rx to the wife. Because its not an arms length transaction (meaning the parties are related), you will have to arrive at a market value for the Rx amount and may not be able to simply use any value you choose.

The husband will probably now make a capital gain on this sale, and if this is high enough he may have to pay some CGT.

There will most probably be STT tax on the transaction which is a relatively small tax paid on the transfer of any securities, based on the value of the transaction.

That said, I am not a tax expert and the above is from fairly recent experience, but may have been unique to my situation and not yours. It would really be worth your whils spending a short session with a tax consultant just to be sure.

Non tax implications are that some paper work needs to be presented to CIPC to do the change in ownership and a written contract would be a good idea too.

Others would depend on why you are doing this. For instance if its to avoid creditors, there may be certain time limits in which the transaction can be reversed by creditors.

[sterne.law@gmail.com]

To follow on the creditors issue -

In insolvency matters, such transactions are deemed as dispositions and are in a manner of speaking reversed as if they did not happen. [in an insolveny case the marriage system DOES now become a bigger factor, due to in community being a joint estate]

[Missnancyalex]

I don’t know much about this but I did little research on this topic and find these resources may be at-least one of them will be helpful to you.

http://sa-property.blogspot.com/2008/01/transfer-process-you-buyer.html

http://www.sars.gov.za/home.asp?pid=8413

http://www.law24.com/index.php?option=com_fastcontent&view=layman&Itemid=168&domid=slucb/9kmdb/8seeb/a6mfb/sf1rb

http://www.northernlaw.co.za/

[roryf]

We changed shares of a PTY company in 2010 from the husband to his wife. I think that we just payed for the SST tax as Busfact has stated.The accountants worked out the value of the shares and the tax was payed on that value.

As far as I am aware the CGT or Death duty is deferred to the wife and should she sell or die, the tax will then have to be payed.

Don't quote me on this..

[Dave A]

As far as I am aware the CGT or Death duty is deferred to the wife and should she sell or die, the tax will then have to be payed.

I was aware of this - but I'm not sure whether this applies only with asset transfers arising from the death of a spouse (which might not apply in the OP's case).

[BusFact]

I was aware of this - but I'm not sure whether this applies only with asset transfers arising from the death of a spouse (which might not apply in the OP's case).

I'm pretty sure that is only in the case of death of the one spouse.

[J7J]

Phew... There are a number of factors to consider here. Thank you so much to everyone that has replied!

[msmoorad]

i have a CC of which i am 100% owner/partner

its just over 2 yrs old.

what i wish to do is transfer it onto my sisters name as she & her husband want to open a small business

i registered thecc witht he intention to do contracting for the Ethekwini municipality but things did not work out
i keep on getting letters from SARS though, every few months, which shows an increasing amount that im owing them for failing to submit returns etc
i went once to their offices in Mt Edgecombe & explained that the company is dormant and has not been trading
i thought things were sorted out but these notices keep on coming

and i really do want to transfer it onto my sisters name

whats the quickest/cheapest/easiet way out?

[CLIVE-TRIANGLE]

Generally speaking, donations between spouses does not attract tax. If you transfer member's interest between spouses, the difference between "market value" and price represents a donation.

As mentioned, if creditors are an issue behind the transfer, I am under the impression that any such transfer, if within 6 months of any action, will be set aside.

The SST (security transfers tax) referred to in one of the posts amounts to the old stamp duty which it replaced. It is 0.25% of the proceeds and does not relate to cc's, only companies and it's shares.

The transferor also needs to consider the effect of any sureties he may have signed - he will not easily be released from these.

[geraldenek]

Although the company is dormant you will still need to compelete the outstanding tax returns as they will keep sending penalty notices and payment is due on them.

I suggest you consult with an accountant as to what is outstanding and what needs to be done for SARS and CIPC as i guess you have not done your annual returns with CIPC either.

It is a simple process to change membership at CIPC but your annual returns must be up to date in order to do so

[msmoorad]

Although the company is dormant you will still need to compelete the outstanding tax returns as they will keep sending penalty notices and payment is due on them.

I suggest you consult with an accountant as to what is outstanding and what needs to be done for SARS and CIPC as i guess you have not done your annual returns with CIPC either.

It is a simple process to change membership at CIPC but your annual returns must be up to date in order to do so

thanks
so it looks like i have to go back to SARS, take a number & wait for it to come up on the screen & then go give them my sad stories.