We all give gifts to family and friends and generally don’t give it a second thought. However, did you know that the South African Revenue Service (SARS) considers these 
to be donations, and if you are particularly generous, you may be liable for donations tax?
Donations include those made in cash, of fixed property, Kruger rands, a car, or any other asset given away for free. SARS does not distinguish between donations or gifts given to family members, friends, or an organisation.
All South African taxpayers who are resident (for tax purposes), whether they are an individual, a company, or a trust, must pay donations tax. Non-residents are excluded, so if a non-resident relative living overseas sends you money, they do not have to pay donations tax in South Africa.
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DONATIONS TAX IN ACTION Let say, for example, you have two children, and you buy one of them a car for R80 000. You decide to give the other one the cash equivalent. Your total donation amount is R160 000. You must pay donations tax at 20 percent on R60 000, which equals R12 000. |
As an individual taxpayer, the first R100 000 that you donate per tax year is exempt. If you make donations to different people or organisations throughout the tax year, these 
should be added up, and you will pay tax on any donations made that exceed R100 000.
Certain donations may be exempt and excluded from this calculation.
The tax rate depends on the size of the donation:
The following amounts or donations are exempt from donations tax:
The first R100 000 donated by a natural person in any tax year.
Donations between spouses.
The first R10 000 for casual gifts given by entities other than natural persons (for example, companies and trusts).
Contributions towards a person’s upkeep, such as paying for a child’s accommodation costs at university or the living expenses of an ageing parent.
Payment of school fees and education costs for your child.
Donations to a registered Public Benefit Organisation (PBO) or government organisation.
As soon as you make a donation, notify SARS by completing a Donations Tax Declaration Form (IT144 form) and file it on the SARS Online Query System (SOQS) on 
the SARS website with proof of payment.
You can also submit the form to your nearest SARS office.
The donations tax must be paid via eFiling by the end of the following month after you made the donation. So if you made a donation on 12 August, for example, you must pay the tax by the end of September.
Even if you donate less than R100 000, you must still notify SARS each time you 
donate. This helps SARS keep track of when your total donations exceed the R100 000 limit for the tax year.
SARS relies on the honesty of donors to declare their donations as they are made.
When you complete your tax return, you are asked whether you received a donation in 
the tax year. This is considered non-taxable income, and you must be honest and declare it to SARS. You will not pay tax on a donation received, unless the donor fails to pay the tax, in which case you may be held liable.
Also, if SARS finds that the full amount of donations tax wasn’t paid, it will request the donor to pay the shortfall. If the donor fails to pay, then you, as the recipient, will be held liable for this tax.
