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Donations and tax – To give or not to give?

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Donations and tax – To give or not to give?

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Some say that charity doesn’t hurt, but in some cases it can.

Did you know that when you donate any property or deemed property to someone, donations tax is payable? More specifically, Donations tax is payable on any donation of property or a donation of a right to property.

But what is a donation according to law?

A donation is seen as the giving away of cash or non-cash assets out of generosity where you expect nothing in return or where you get less than the market value for thing being donated.

Donations tax in 2019*

Donation value Tax rate
R1 – R100 000 0%
R100 001 – R30 million 20%
R30 million and above 25%

There are some exemptions you should take note of:

  • Donations between spouses are fully exempt, irrespective of the amount.
  • Donations that are cancelled within six months of taking place are exempt from donations tax.

Important to note:

It is usually the donor that has to pay the donations tax. If the donor fails to pay the donations tax within the specified period then both the donor and donee will be held jointly and severally liable.

Depending on the nature of the donation, donations and capital gains tax could be incurred.

Before deciding to donate something to another person, make sure that you have consulted a tax practitioner or financial adviser that can take you through the steps and help you to understand the tax liability that may arise out of such a donation.

*Consult the SARS website for the latest info on Donation tax

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Shameer Chothia

Shameer is currently a legal adviser at Momentum, the Chairman of the Stone Terrace Home Owners Association, and the Rhine Stone Body Corporate. He is passionate about client education and financial literacy as he strongly believes in the pivotal role it plays in people's lives. Shameer is also an avid soccer fanatic. All views expressed are Shameer’s own views and neither reflect nor are influenced by the views of Momentum.

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