Donations Tax
The Rate at which Donations are taxed
Donations tax is calculated at a flat rate of 20% on the value of the donation up to R30 million, and at a rate of 25% on donations over and above R30 million. However, Sars makes provision for a donations tax threshold of R100 000 and below on which no donations tax is payable.
Tax consequences for the Recipient of the donation:
Any donation made to a person is tax free, although the donation has to be declared in the recipient’s (Donee’s) annual Tax Return which is submitted using an ITR12 under the section “Amount Considered Non-Taxable”, thereby ensuring that all your income is declared in your ITR12 submission, inclusive of income that you regard as Non-taxable [see eFiling declaration below]:
Tax consequences for the Donor [The Giver of the Donation]:
The Donor is responsible for the declaration and payment of Donations Tax which is calaculated at a flat rate of 20% on the value of the donations or gifts in excess of R 100,000 per tax year. Numerous donations can be made in any Tax year, and as long as the sum of all the donations made does not exceed the tax free threshold of R 100,000, no donations tax will be payable by the Donor thereof.
Example:
You, the Donor, has made the following Donations in the Tax year ending on 28 February 2023:
- R 40,000 to your sister to assist her with expenses relating to dental treatment required;
- R 50,000 to a friend who couldn’t afford the expenses related to having his vehicle repaired;
- R 60,000 to your daughter to assist her in buying a motor vehicle to be registered in her name.
The total mount that would be subjected to Donations Tax at a flat rate of 20% is:
[R 40,000 + R 50,000 + R 60,000] = R 150,000 less the Donations Tax threshold of R 100,000 = R 50,000
You would therefore be liable for Donations Tax of 20% x R 50,000 = R10,000. You as the Donor would therefore be required to complete a IT144 form and submit the form to SARS by the end of the month following the month during which the donation was made and, as such, does not form part of your normal tax returns.
In addition to submitting via a SARS branch, the donations tax return (Form IT144) and supporting documents can also be submitted as follows:
• For Tax Practitioners: pcc@sars.gov.za
• For Taxpayers: contactus@sars.gov.za
When submitting the IT144 and its supporting documents using one of the emails mentioned above, taxpayers will receive an automated reply with a case number assigned. For ease of use, this number will be quoted in related correspondence on the progress of the case. Where there are audit issues or a request for additional information is issued, taxpayers can then use the SARS Online Query System (i.e. submitting using the SARS website) as they will now have a case number to which the documents can be linked to.
Payment can also be made via eFiling.
Tax consequences of Non-Payment of Donations Tax:
If the donor fails to pay the Donations Tax on time, the donor and donee become equally responsible for the tax.
Donations Tax Exemptions:
- Spouses may make donations to one another, for any amount, and these will be exempt from Donations Tax.
- Donations to approved Public Benefit Organisation are also exempt. Therefore, these types of donations don’t count towards the donor’s R100,000 limit for the year.
- Donations Tax doesn’t apply to Non-Residents. Therefore, should a friend or family member donate money or goods to you (i.e. from funds earned while working overseas), the Donor won’t be liable for any Donations Tax in South Africa.
Donations Tax on Rate on Properties:
- in determining the R30 million threshold, the aggregate value of property donated commences from 1 March 2018 to date of current donation. Any donations made prior to 1 March 2018 must not be taken into account;
- the aggregate value of property to determine the R30 million threshold is calculated after deducting any exemptions (s56);
- where the donor has exceeded the R30 million threshold, all subsequent donations will be taxed at the rate of 25%.
