Couples who live together will also enjoy any concessions that apply to married couples if the latest changes to the proposed legislation on capital gains tax become law.
A new draft of the legislation which incorporates CGT - the Taxation Laws Amendment Bill which is to be implemented on October 1 - has been released for comment.
In the second draft the definition of a spouse has been extended to include all couples in a "permanent marital-like" relationship.
The effect of this proposal is that, for example, heterosexual partners also enjoy the deferral of taxes such as CGT, donations tax and estate duty that previously applied only to heterosexual married couples.
For instance, where you cede or leave a policy to your partner after your death - neither you nor the person receiving the proceeds from that policy will have to pay CGT on that policy. Other advantages of being regarded as a spouse are that donations and inheritances between spouses will not trigger capital gains tax.
The previous draft of the legislation already included permanent same sex relationships in order to remove discrimination. The definition of spouse includes all marriages in terms of the law of South Africa and the Recognition of Customary Marriages Act.
Other adjustments to the proposed legislation are that people retiring will pay less tax, but foreign lottery winners pay up.
Franz Tomasek, the manager of tax research at SARS, says key changes since the first draft include:
Bigger exemption in year of death
Under the CGT system when you donate an asset or when you die, CGT must be paid on that asset. But you are already taxed in these circumstances. For example, when you die your estate pays estate duty and when you donate an asset, you have to pay donations tax.
In order to counter the effect of the new tax - CGT - the government announced in the recent Budget that it would reduce the rate at which you pay estate duty and donations tax from 25 percent to 20 percent from October 1.
The latest version of the draft legislation proposes further that the annual exclusion be increased from R10 000 to R50 000 in the year of your death only.
This means that the first R50 000 of gains (less any allowable losses) in your estate will be free of CGT.
Taken together with the exclusions for most personal assets and the R1 million exclusion for a primary residence, this will significantly reduce the number of estates that will have to pay CGT at all.
Second-hand policies
Where an endowment or life policy is held by the original owner until maturity or death, the proceeds from the policy will not be subject to CGT. The reason is that the insurance company pays tax on behalf of the policyholder.
The industry asked SARS to apply the same exclusion to second-hand policies.
The latest draft legislation proposes that while second-hand policies generally will attract CGT on disposal, certain second-hand policies should be exempt.
These include policies you cede or leave to your spouse or a dependent for no consideration. In this case neither you nor the person receiving the proceeds from that policy will pay CGT. CGT will also not be payable on a policy taken out by an employer on the life of an employee, or a spouse who receives the policy as part of a divorce order.
Estates that cannot pay
If you inherit an asset from an estate which has a CGT liability greater than 50 percent of the estate's net value after taking its other liabilities into account, you can choose to either let the estate pay the CGT (which may mean selling the asset) or take the asset and pay the CGT yourself within a period of three years.
Tax bill in the year of retirement
In the latest draft legislation, SARS has also attempted to deal with the concerns of taxpayers who potentially face huge tax bills in the year of retirement.
SARS has acknowledged that capital gains made by, for example, restructuring your investment portfolio in the year in which you plan to retire, may have a negative impact on the taxable portion of your lump sum from retirement by pushing up your average rate of tax. The latest proposal is that you will have to pay CGT on any profits you make on your assets.
However, the capital gain will be excluded from the calculation for the purposes of determining your average rate of tax which you have to pay on the taxable portion of a lump sum benefit you receive from a pension, provident or retirement annuity fund in your year of retirement.
Foreign winnings
The latest proposals may result in you paying CGT on winnings from gambling, games and competitions from foreign sources. Local winnings will still be exempt. So watch out if you win a US state lottery after October this year.
Foreign endowments
Currently the proceeds of endowments which mature after five years are paid out to you tax free because they are taxed in the hands of the insurer.
New legislation proposes that you will be taxed on proceeds from foreign endowments as part of your normal income.
So next time you take out an endowment with a foreign-based company (including the subsidiary of a South African company which is based overseas) bear in mind you will have to declare the matured proceeds of the policy as part of your taxable income.
* For more information on the proposed legislation, log on to the SARS website at www.sars.gov.za, and look for the CGT section.