By Sheldene du Plessis, Senior Accountant – Ascendant Financial Services (Pty) Ltd

When it comes to donations, there are tax responsibilities for both the donor (the person making the donation) and the donee (the recipient). Each party has different obligations related to tax, depending on their role in the donation.

Donor Responsibilities: As a donor, you are responsible for declaring your donation to SARS (South African Revenue Service) and paying the associated donations tax. This tax applies when you give something away without receiving anything in return.

Donee Responsibilities: As a donee, you need to declare the donation you have received in your income tax return. However, you won’t be taxed on it, as the tax responsibility lies with the donor. If the donor fails to pay the donations tax to SARS, the donee might be held liable. In this case, the donee can recover the tax from the donor.

Who Pays Donations Tax? Donations tax applies to South African residents, including individuals, companies, and trusts. Non-residents are not liable for this tax.

Rates of Donations Tax: Donations tax is applied at different rates based on the value of the donations:

• Donations up to R30 million (from 1 March 2018) are taxed at 20%.
• Donations exceeding R30 million are taxed at 25%. When calculating the tax rate, exempt donations (like those to approved organisations) are excluded from the total value.

Exemptions to Donations Tax: Certain donations are exempt from donations tax:

• Donations qualifying for Public Benefit Organisations (PBOs) are exempt, and donors can claim a deduction if the PBO provides a Section 18A certificate.
• Donations between spouses are also exempt from donations tax.
• Donations to approved PBOs do not count toward the donor’s annual R100,000 limit for tax-free donations.

How to Declare and Pay Donations Tax: To declare a taxable donation, you must complete the Donation Declaration Form (IT144) and submit it to SARS, along with proof of payment. Donations tax must be paid by the end of the month after the donation is made.

Conclusion

If navigating this process feels overwhelming, professional tax advice is available to help you manage your donations and tax planning effectively.

References:

Card, D. (2023) Donations and exemptions: Your questions answered, Moneyweb. Available at: https://www.moneyweb.co.za/financial-advisor-views/donations-and-exemptions-your-questions-answered/ (Accessed: 20 February 2025).

Donations tax explained (2024) RSM South Africa. Available at: https://www.rsm.global/southafrica/insights/tax-insights/donations-tax-explained (Accessed: 20 February 2025).