TAXATION Read the article below and answer the questions that follow. For this question, you are encouraged to research and consult with additional readings.If you are married in community of property, you may be surprised to discover that 50% of your spouse’s tax liability from investments, such as the income from interest, rental, dividends, and capital gains, is added to your tax bill – and vice versa. If you did not sign an antenuptial contract, you are automatically married in community of property, which is the default marriage regime in South Africa.As Crystal Venter, tax consultant at Tax Consulting SA, explains, this means that all assets and liabilities possessed prior to the marriage (subject to certain exceptions), as well as those acquired throughout the marriage, will be part of a communal (joint) estate.Each spouse will be required to declare their respective earnings separately, with both being required to declare their respective joint assets. As these assets form part of the joint estate, the tax liabilities would be equally divided. Subsequently, when you and your spouse are married in community of property, the income tax implication is that you are taxed on 50% of each spouse’s individual earnings from assets.According to the SA Revenue Service (SARS), once it has identified you as married in community of property based on your previous declaration and has further verified this information against the Department of Home Affairs, you and your spouse will be linked as follows:"If investment income is identified for you based on third-party data received (such as IT3(b) certificate for interest earned), the third-party data will also be entered on the spouse’s return if you have been linked on the Sars system and vice versa. The investment income will be apportioned accordingly and will reflect on an ITA34 issued to you and your spouse, on assessment."Extracted from: Fisher-French, M. 2024. Personal Finance | You may be liable for your spouses’ tax bill. News24, 21 January 2024. [Online]. Available at:https://www.news24.com/citypress/personal-finance/personal-finance-you-may-be-liable-for- your-spouses-tax-bill-20240121 [Accessed 12 February 2024]. 1) identify one potential challenge and one advantage for spouses in a marriage in community of property when it comes to the taxation of joint assets.

TAXATION Read the article below and answer the questions that follow. For this question, you are encouraged to research and consult with additional readings.If you are married in community of property, you may be surprised to discover that 50% of your spouse’s tax liability from investments, such as the income from interest, rental, dividends, and capital gains, is added to your tax bill – and vice versa. If you did not sign an antenuptial contract, you are automatically married in community of property, which is the default marriage regime in South Africa.As Crystal Venter, tax consultant at Tax Consulting SA, explains, this means that all assets and liabilities possessed prior to the marriage (subject to certain exceptions), as well as those acquired throughout the marriage, will be part of a communal (joint) estate.Each spouse will be required to declare their respective earnings separately, with both being required to declare their respective joint assets. As these assets form part of the joint estate, the tax liabilities would be equally divided. Subsequently, when you and your spouse are married in community of property, the income tax implication is that you are taxed on 50% of each spouse’s individual earnings from assets.According to the SA Revenue Service (SARS), once it has identified you as married in community of property based on your previous declaration and has further verified this information against the Department of Home Affairs, you and your spouse will be linked as follows:"If investment income is identified for you based on third-party data received (such as IT3(b) certificate for interest earned), the third-party data will also be entered on the spouse’s return if you have been linked on the Sars system and vice versa. The investment income will be apportioned accordingly and will reflect on an ITA34 issued to you and your spouse, on assessment."Extracted from: Fisher-French, M. 2024. Personal Finance | You may be liable for your spouses’ tax bill. News24, 21 January 2024. [Online]. Available at:https://www.news24.com/citypress/personal-finance/personal-finance-you-may-be-liable-for- your-spouses-tax-bill-20240121 [Accessed 12 February 2024]. 1) identify one potential challenge and one advantage for spouses in a marriage in community of property when it comes to the taxation of joint assets.

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter6: Deductions And Losses: In General

Section: Chapter Questions

Problem 1CPA: Which of the following is a deduction for AGI? a. Charitable contributions. b. Alimony paid for a...

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TAXATION

Read the article below and answer the questions that follow. For this question, you are encouraged to research and consult with additional readings.

If you are married in community of property, you may be surprised to discover that 50% of your spouse’s tax liability from investments, such as the income from interest, rental, dividends, and capital gains, is added to your tax bill – and vice versa. If you did not sign an antenuptial contract, you are automatically married in community of property, which is the default marriage regime in South Africa.

As Crystal Venter, tax consultant at Tax Consulting SA, explains, this means that all assets and liabilities possessed prior to the marriage (subject to certain exceptions), as well as those acquired throughout the marriage, will be part of a communal (joint) estate.

Each spouse will be required to declare their respective earnings separately, with both being required to declare their respective joint assets. As these assets form part of the joint estate, the tax liabilities would be equally divided. Subsequently, when you and your spouse are married in community of property, the income tax implication is that you are taxed on 50% of each spouse’s individual earnings from assets.

According to the SA Revenue Service (SARS), once it has identified you as married in community of property based on your previous declaration and has further verified this information against the Department of Home Affairs, you and your spouse will be linked as follows:

"If investment income is identified for you based on third-party data received (such as IT3(b) certificate for interest earned), the third-party data will also be entered on the spouse’s return if you have been linked on the Sars system and vice versa. The investment income will be apportioned accordingly and will reflect on an ITA34 issued to you and your spouse, on assessment."

Extracted from: Fisher-French, M. 2024. Personal Finance | You may be liable for your spouses’ tax bill. News24, 21 January 2024. [Online]. Available at:

https://www.news24.com/citypress/personal-finance/personal-finance-you-may-be-liable-for- your-spouses-tax-bill-20240121 [Accessed 12 February 2024].

1) identify one potential challenge and one advantage for spouses in a marriage in community of property when it comes to the taxation of joint assets.

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