Donations Tax

What is Donations Tax?

Donations tax is a tax that is payable at a flat rate on the value of property disposed of by a donation. Donations tax is calculated at flat a rate of 20% on the value of the property donated.

A donation includes property disposed of for an inadequate consideration.

Exemptions

Please read sections 54 to 64 of the Income Tax Act, 196 for a whole list of exemptions from donations tax.

Annual exemptions

A donation will be exempt if the total value of donations for a year of assessment does not exceed:

  • Casual gifts by companies and trusts: R10 000.
  • Donations by individuals: R100 000 (2008 to 2013 years of assessment)

Who is liable to pay donations tax?

Donations tax applies to any individual, company or trust that is a resident of South Africa

Non-residents are not liable for donations tax.

The person making the donation is liable for the tax but if the donor fails to pay the tax within the set period, the donor and donee are jointly and severally liable for the tax.

Public companies and public benefit organisations are exempt from donations tax, amongst others.

What steps must I take?

After making a donation you should fill in form IT144 and send it to a SARS office branch with your payment.

When should it be paid?

Donations tax must be paid by the end of the month following the month during which the donation has been made. It may be a longer period if SARS allows it. Payment must be sent with form IT144.

A donation takes effect when all legal formalities for a valid donation have been met.

How should it be paid?

Donations tax can only be paid by a bank cheque at your local SARS branch office.