Donations tax is a tax payable at a flat rate on the value of property disposed of by donation (sections 54 to 64 of the Income Tax Act, 1962). Donations tax is levied at a flat rate of 20% on the value of the property donated. However, the amount of donations exceeding R30 million is taxed at a rate of 25%.
A donation is widely defined and includes property disposed of for inadequate consideration (section58).
Section 56(1) contains a list of exempt donations which include amongst others donations between spouses and donations to approved public benefit organisations.
A donation will be exempt if the total value of donations for a year of assessment does not exceed:
Also qualifying for exemption is so much of any bona fide contribution made by the donor towards the maintenance of any person. While not limited to a specific amount, this exemption is limited to what the Commissioner considers reasonable (section 56(2)(c)).
Deductions in respect of donations to certain public benefit organisations are limited to 10% of taxable income (excluding retirement fund lump sums and severance benefits). The amount of donations exceeding 10% of the taxable income is treated as a donation to qualifying public benefit organisations in the following tax year.
After making a donation you should fill in form IT144 (Declaration by donor/donee) and submit it to your nearest SARS branch with your proof of payment.
Donations tax must be paid by the end of the month following the month during which the donation takes effect or such longer period as SARS may allow (section 60(1)).
Let us take away the stress of your annual tax submissions. Get in touch today, we will respond promptly, effectively and accurately to your tax compliance needs.
Bryanston,
Sandton, Johannesburg
