What is donations tax in south africa

Donations tax applies to any person for example: individual, company or trust that is a South African resident. Non-residents are not liable for donations tax. If the donor fails to pay the tax within the payment period, the donor and donee are jointly and severally liable.

How do I pay donations tax? What is the payment period for donations tax Donations tax is payable at the end of the month following the month in which the donation was made. Can the gift come in the form of a loan? Formalising the agreement When deciding which path to follow, it is important that all parties involved are comfortable with the arrangement. Get pre-approved for a home loan in just 2 minutes Get pre-approved.

Related articles First-time home buyers grant for South Africans. Can transfer fees be included in your bond? How to qualify for a second home loan. South African companies often seek to conduct corporate social investment initiatives for a number of reasons including, but not limited to, enhancing their Broad-based Black Economic Empowerment status.

These initiatives are commonly conducted by way of donating assets, funds or services to public benefit organisations. It will be prudent for such companies to structure or implement their donations in a manner that maximises their tax benefits and tax efficiency.

The eligibility of a PBO to issue section 18A Receipts is limited to specific approved organisations that are non-profit companies, trusts or associations of persons that have been incorporated, formed or established in South Africa. The taxpayer will only qualify for a deduction from its taxable income if the donation is actually paid or transferred to the PBO.

It is important to note that a South African branch of foreign exempt organisation does not qualify for approval under section 18A of the ITA. The person making the donation donor is liable for the tax but if the donor fails to pay the tax within the prescribed period the donor and donee are jointly and severally liable for the tax section Public companies and public benefit organisations amongst others are exempt from donations tax section 56 1 h and n.

Donations tax must be paid within three months of the donation taking effect or such longer period as SARS may allow section 60 1. Payment must be accompanied by form IT section 60 4.