Donations tax

What's New?

18 April 2016 - Enhancements to the Income Tax Return for Companies (ITR14)
As part of the continued process to maintain high levels of SARS efficiency and compliance, further enhancements  will be introduced to the Income Tax Return for Companies (ITR14) from 18 April 2016.Click here to read more.

What is it?

Donations tax is tax payable at a flat rate of on the value of property disposed of by  a donation (sections 54 to 64 of the Income Tax Act, 1962). Donations tax is levied at a flat rate of 20% on the value of the property donated
A donation includes property disposed of for an inadequate consideration (section 58).
 
Exemptions

Section 56(1) contains a list of exempt donations which include amongst others donations between spouses and donations to approved public benefit organisations.
 
Annual exemptions

A donation will be exempt if the total value of donations for a year of assessment does not exceed:
  • Casual gifts by companies and trusts: R10 000.
  • Donations by individuals: R100 000 (2008 to 2013 years of assessment) (section 56(2) (a) and (b)).

Who is it for?

Donations tax applies to any individual, company or trust that is a resident as defined in section 1 of the Income Tax Act, 1962.
 
Non-residents are not liable for donations tax.
 
The person making the donation (donor) is liable for the tax but if the donor fails to pay the tax within the  set period the donor and donee are jointly and severally liable for the tax (section 59).
 
Public companies and public benefit organisations amongst others are exempt from donations tax (section 56(1) (h) and (n)).
 
How does Donations Tax work in relation to an inheritance?, click here for more information.

What steps must I take?

After making a donation you should fill in form IT144 (Declaration by donor / donee) and send it to SARS with your payment.

When should it be paid?

Donations tax must be paid by the end of the month following the month during which the donation takes effect or such longer period as SARS may allow (section 60(1)). Payment must be accompanied by form IT144 (section 60(4)).
 
A donation takes effect when all legal formalities for a valid donation have been complied with (section 55(3)).
 

How should it be paid?

Donations tax can be paid by a bank cheque at a SARS branch office or via eFiling. For more information on payment rules, click here.

Last Updated: 12/05/2016 10:26 AM     print this page
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 Top FAQs

What is Donations Tax?
Donations tax is payable on the total value of property disposed of (whether directly or indirectly) by a resident by means of a donation. ("Donation" is the gratuitous disposal of a property in this case, without expecting something in return.)

What is the rate of Donations tax?
Donations tax is levied at a flat rate of 20% on the value of the property donated.

Do any exemptions apply to Donations Tax?
In terms of section 56(2) of the Income Tax Act, 1962, donations tax shall not be payable in respect of the sum of the values of all property disposed of under donations (by a donor who is a natural person),

What happens when a disposal of property is considered "inadequate"?
If any property has been disposed of for a consideration that, in the opinion of the Commissioner, is not an adequate consideration, that property is treated as having been disposed of by donation.