A Fin24 user wants to know about the tax implications of donating the tax free portion of his retirement fund to his wife. He writes:
I intend to donate my tax free portion of my retirement fund to my wife so that she can invest it for an income after retirement.
The reason for this is to save on income tax after retirement, because if I invest it in my name, the tax payable will be much higher than if it is devided by two people.
My questions are:
– Will I have to pay gift tax?
– Will she have to pay income tax on the donation received?
We are married out of community of property (1982).
Marc Sevitz of TaxTim responds.
Donations made between spouses are not taxable so neither you nor your wife will have to pay any donations tax.