Editor’s Note:
In this third newsletter for 2026 we consider, inter alia, the draft Taxation Laws Amendment Bill 2026 proposals pertaining to the following:
- SARS Living Annuity Commutation threshold.
- Donations Tax inter-spouse Exemption Limitations.
- Advance Pricing Agreement (APA) Eligibility.
- SARS Interpretation Note (IN) 145, re the ETI.
- SARS Ins, Guides, Draft Guides, BGRs, Draft BGRs, BPRs and VAT Rulings Noter-Up
Tony Davey – Editor | Duncan McAllister – Co-Editor | Werner Vos – Consultant
tonyd@harding.co.za / www.tonydavey.com
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SARS LIVING ANNUITY COMMUTATION THRESHOLD
Paragraph (c) of the definition of “living annuity” in Section 1(1) of the Income Tax Act (ITA), is amended, effective 1 March 2026, to the following effect –
- The amount referred to in paragraph (c) is now R150 000 (previously R125 000). This value is the threshold at which a lump sum commutation of a living annuity remaining asset value balance is permitted. The threshold limit applies on a per-insurer or per-fund basis. Thus, where an annuitant holds multiple living annuities with the same insurer or fund, the annuities must be aggregated in determining the threshold limits.
DONATIONS TAX INTER-SPOUSE EXEMPTION LIMITATIONS
Effective 20 February 2026, new provisos to Section 56(1)(a) and (b) of the ITA disallow the donations tax exemption between spouses in circumstances in which the recipient donee spouse is a non-resident.
This is to combat a Donations Tax and Section 9H Capital Gains Tax (CGT) avoidance scheme which arises when there is a staggered cessation of tax residence by spouses.
In essence, the donee spouse first becomes a tax non-resident and the resident donor spouse then makes a donations tax exempt donation to the non-resident spouse. Subsequently, due to the donor resident spouse’s reduced asset value, there is a lesser deemed disposal value of the resident spouses’ estate, for purposes of the Section 9H CGT (the so-termed exit charge) thereby resulting in a reduced capital gain.
The amendments thus provide that donations to a non-resident spouse do not benefit from the donations tax exemption.
ADVANCE PRICING AGREEMENT (APA) ELIGIBILITY
In Davey’s Locker 6.2023 we noted the introduction of the APA contained in Sections 76 A – P of the ITA.
In essence, this pertains to multinationals that wish to create certainty on valuation methodology and pricing in international transactions, by obtaining an Advance Pricing Agreement from SARS, pertaining to transfer pricing under Section 31 of the ITA.
The eligibility monetary threshold criterion was a R50 billion turnover in the year of assessment preceding the APA application request to SARS. This has been reduced to R10 billion – effective 7 August 2026. Other amendments have also been made regarding SARS fees and the Application methodology.
We note that SARS retains a discretion, based on the nature of the “affected transaction” as defined in Section 31, as to whether to accept or reject an application.