Donations Tax

1. www.kvvinc.co.za
087 351 2022

2. Donations TaxDonations Tax

3. Income Tax Act, 1962 : Sections 54 to 64
“Donation tax is tax payable at a rate as
prescribed on the value of the property
disposed of by donation”
→ Donation = includes property disposed
of for an inadequate consideration.

4. Who?
• Applies to individual / company / trust SA
resident as defined in Income Tax Act
• Not applicable to non-residents
• Payable by DONOR
• Failure to pay = donor and donee jointly
and severably liable

5. When?
• Payable at the end of the month after the
month the of donation takes effect
• Takes effect = when all legal formalities
have been complied with

6. How?
• Complete form IT144 (Declaration by
donor/donee)
• Payable via E-Filing

7. Exemptions – Sec 56(1)
• Donations between spouses
• Donations mortis causa
• Donee no benefit until death of donor
• Cancelled within 6 months from taking
effect
• Traditional council / community / tribe

8. Exemptions (continued)
• Property outside SA & acquired by non-
resident
• Sphere of Government - Section 10(1)(a)
• Voluntary award
• Value included in gross income of donee
• Disposed in pursuance of any trust
• Donation = right to use of farming property
if donee is child of donor

9. Exemptions (continued)
• Donor is a Public Company
• Property received ito Land Reform
Programme
• Donations between groups of companies
• Donations to Public Benefit Organisations

10. Exemptions – Sec 56(2)
• Donation by Natural Person:
→ Does not exceed R100,000 per year of
assessment
• Persons other than Natural Persons
→ Does not exceed R10,000 per year of
assessment
• Bona fide contribution towards the
maintenance of any person

11. Rate
• 20% on value not exempted
• Example (Natural Person):
Donation = R500,000
Exempted = R100,000
Donation Tax = 20% of R400,000
= R80,000

12. www.kvvinc.co.za
087 351 2022
training@kvvinc.co.za