Payment and Assessment of Tax Donations tax is a separate tax – tax on the transfer of wealth
Specific Exemptions – s56 Fulfils 2 functions: taxes people who may want to donate their assets to avoid:
- Donor liable for donations tax at the end of the month • Normal income tax on the income from those assets, and/or
To/for the benefit of the donor’s spouse: following the month in which the donation made • Estate duty when those assets are excluded from their estates
under antenuptial/ postnuptial contract
donation to a trust in which the spouse has a vested interest - Commissioner can allow for longer period Payable on value of any property disposed by SA resident i.t.o donation
applies to donations as result of couples changing matrimonial property system
indirectly/directly
Donatio mortis causa - made in contemplation of death - Donation tax calculated is per donation – NOT for the YOA
donor anticipates death, and the donation is made as a result of death –
“last minute donation” - If donor fails to pay within the prescribed period, both donor + If aggregate value < R30 million → tax levied at 20% of value of property
donee only obtains benefit until the death of donor donee will be jointly & severally liable to pay the donations tax If aggregate value > R30 million → first R30 mil at 20%, excess taxed at 25%
donor does not anticipate death
cancelled within 6 months
- If more than one donation made during YOA, general
by/to any traditional council, community or tribe
exemption amount deducted in chronological order & donor Important Definitions - s55(1)
only liable once general exemption has been fully exhausted
of foreign property acquired by donor:
▪ before they became a SA resident for the first time or PROPERTY:
▪ by inheritance from person (at the date of their death was not ordinarily
- If more than one donation made on same date, donor may
resident) or choose the order donations deemed to have been made any right to property
▪ by donation if at date of donation, original donor was person not ordinarily whether movable/immovable
resident in SA or …
whether corporeal/incorporeal
made by or to any exempt persons like PBOs, Government, etc. wherever situated
Voluntary award included in gross income of donee:
services rendered – par (c) Examples of corporeal (tangible: land, buildings, machinery
termination of services – par (d) Examples of incorporeal (intangible): copyrights, patents trademarks
fringe benefits – par (i) Services rendered for free ≠ donation and not subject to donations tax (no
property is being disposed of)
Voluntary award where gain of share options included in GI of donee
DONATIONS TAX
Trust distributions to beneficiaries of a trust but donations made to trusts are subject
to donations tax DONATION:
A right (not fiduciary/usufructuary interest) to the use/ occupation of farming
property to donor’s child “Any gratuitous disposal of property including any gratuitous waiver or renunciation
of a right.”
Made by a public company
Full ownership of immovable property to the Land Reform
To be gratuitous, it needs to be for no consideration or free
Programme/National Development Plan
Donations by Companies – s57 Held by court: donation exists if motivated “pure liberality” or “disinterested
Between companies where donee & donor are part of same group of benevolence”
companies Creditor writes off loan because debtor insolvent (not motivated “pure liberality”)
▪ Deals w/ donations made by companies at the instance of another
Any bona fide contribution to the maintenance of any person person Lender granting interest free loan to borrower:
(Stiglingh, et al., 2021) ✓ If lender entitled to charge interest but doesn’t = gratuitous waiver of his right
▪ Person (shareholder) instructs the company to donate to certain
to interest
donee → deemed to have made donation If no provision for interest = no inherent right to interest, therefore no waiver of
▪ It is an anti-avoidance section – levies donations tax if is value any right to interest
General Exemption extracted from a company as donation to 3rd party
DEEMED DONATION:
▪ Value extracted = dividend from company to person whose instance
Fixed amount – after determined that donations not specifically donation made
Property disposed of for an inadequate consideration in the opinion of the
Commissioner is deemed to have been disposed of as a donation
Sum of all donations
Amount of deemed donation = Value of Property – Consideration Payable By
NATURAL PERSONS Person Acquiring It
R100 000 of sum of all property donated during YOA
Donations by Spouses Married in
Example: someone disposes of a car for R1 000, though it’s worth is R1 million.
Not apportionable Community of Property – s57a The deemed donation will be R999 000 [R1 000 000 – R1 000]
If more than one donation made during YOA, donations dealt in
chronological order to determine how much of general exemption is ♦ Donates from joint estate = both spouses is deemed to have DONEE:
available made donation (50%/50%)
“Any beneficiary under a donation”
OTHER THAN NATURAL PERSONS ♦ Property excluded joint estate = treated as having only made by
In other words, the person/party receiving the donated property
R10 000 of sum of all casual gifts made during YOA that spouse
Casual gifts: wedding gifts, birthday gifts, Christmas gifts Includes: trustee of trust receiving property under donation for beneficiaries’ benefit
♦ As a couple, general exemption = R200 000 However, donation tax payable by trustee may be recovered from assets of trust
If period exceeds/less than 12 months, amount be apportioned
Specific Exemptions – s56 Fulfils 2 functions: taxes people who may want to donate their assets to avoid:
- Donor liable for donations tax at the end of the month • Normal income tax on the income from those assets, and/or
To/for the benefit of the donor’s spouse: following the month in which the donation made • Estate duty when those assets are excluded from their estates
under antenuptial/ postnuptial contract
donation to a trust in which the spouse has a vested interest - Commissioner can allow for longer period Payable on value of any property disposed by SA resident i.t.o donation
applies to donations as result of couples changing matrimonial property system
indirectly/directly
Donatio mortis causa - made in contemplation of death - Donation tax calculated is per donation – NOT for the YOA
donor anticipates death, and the donation is made as a result of death –
“last minute donation” - If donor fails to pay within the prescribed period, both donor + If aggregate value < R30 million → tax levied at 20% of value of property
donee only obtains benefit until the death of donor donee will be jointly & severally liable to pay the donations tax If aggregate value > R30 million → first R30 mil at 20%, excess taxed at 25%
donor does not anticipate death
cancelled within 6 months
- If more than one donation made during YOA, general
by/to any traditional council, community or tribe
exemption amount deducted in chronological order & donor Important Definitions - s55(1)
only liable once general exemption has been fully exhausted
of foreign property acquired by donor:
▪ before they became a SA resident for the first time or PROPERTY:
▪ by inheritance from person (at the date of their death was not ordinarily
- If more than one donation made on same date, donor may
resident) or choose the order donations deemed to have been made any right to property
▪ by donation if at date of donation, original donor was person not ordinarily whether movable/immovable
resident in SA or …
whether corporeal/incorporeal
made by or to any exempt persons like PBOs, Government, etc. wherever situated
Voluntary award included in gross income of donee:
services rendered – par (c) Examples of corporeal (tangible: land, buildings, machinery
termination of services – par (d) Examples of incorporeal (intangible): copyrights, patents trademarks
fringe benefits – par (i) Services rendered for free ≠ donation and not subject to donations tax (no
property is being disposed of)
Voluntary award where gain of share options included in GI of donee
DONATIONS TAX
Trust distributions to beneficiaries of a trust but donations made to trusts are subject
to donations tax DONATION:
A right (not fiduciary/usufructuary interest) to the use/ occupation of farming
property to donor’s child “Any gratuitous disposal of property including any gratuitous waiver or renunciation
of a right.”
Made by a public company
Full ownership of immovable property to the Land Reform
To be gratuitous, it needs to be for no consideration or free
Programme/National Development Plan
Donations by Companies – s57 Held by court: donation exists if motivated “pure liberality” or “disinterested
Between companies where donee & donor are part of same group of benevolence”
companies Creditor writes off loan because debtor insolvent (not motivated “pure liberality”)
▪ Deals w/ donations made by companies at the instance of another
Any bona fide contribution to the maintenance of any person person Lender granting interest free loan to borrower:
(Stiglingh, et al., 2021) ✓ If lender entitled to charge interest but doesn’t = gratuitous waiver of his right
▪ Person (shareholder) instructs the company to donate to certain
to interest
donee → deemed to have made donation If no provision for interest = no inherent right to interest, therefore no waiver of
▪ It is an anti-avoidance section – levies donations tax if is value any right to interest
General Exemption extracted from a company as donation to 3rd party
DEEMED DONATION:
▪ Value extracted = dividend from company to person whose instance
Fixed amount – after determined that donations not specifically donation made
Property disposed of for an inadequate consideration in the opinion of the
Commissioner is deemed to have been disposed of as a donation
Sum of all donations
Amount of deemed donation = Value of Property – Consideration Payable By
NATURAL PERSONS Person Acquiring It
R100 000 of sum of all property donated during YOA
Donations by Spouses Married in
Example: someone disposes of a car for R1 000, though it’s worth is R1 million.
Not apportionable Community of Property – s57a The deemed donation will be R999 000 [R1 000 000 – R1 000]
If more than one donation made during YOA, donations dealt in
chronological order to determine how much of general exemption is ♦ Donates from joint estate = both spouses is deemed to have DONEE:
available made donation (50%/50%)
“Any beneficiary under a donation”
OTHER THAN NATURAL PERSONS ♦ Property excluded joint estate = treated as having only made by
In other words, the person/party receiving the donated property
R10 000 of sum of all casual gifts made during YOA that spouse
Casual gifts: wedding gifts, birthday gifts, Christmas gifts Includes: trustee of trust receiving property under donation for beneficiaries’ benefit
♦ As a couple, general exemption = R200 000 However, donation tax payable by trustee may be recovered from assets of trust
If period exceeds/less than 12 months, amount be apportioned
