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Before you agree to give your company's Movember team a rand-for-rand donation, consider these two tax implications

by , 06 November 2014
Movember is here and that means men everywhere are growing mustaches to try raise awareness and money for prostate cancer.

Maybe you might want to get behind this good cause. So you've approached your company's Movember team, who are proudly growing their staches and tell them that for every rand they bring in, you'll match it.

Don't be too hasty though. Your donation to your Movember team has tax implications.

Read on to find out what they are so your company doesn't get a nasty penalty from SARS for trying to do something good...

 

There are two tax implications that come with giving your company Mo-Bros a rand-for-rand donation

 
1. If you donate more than 10% of your company's income, you'll trigger donation tax
Let's say there are 50 employees in your company's Movember team and they all raise R1 000 each. This means you need to give them a R50 000 donation to match it. 
 
Let's also assume your company's total income for that year is R500 000. This means your donation is 10% of what your company earns and you now have to pay donations tax.
 
That's why, before you make your generous rand-for-rand announcement, do the maths to see if it's feasible or not. 
 
If you suspect it will trigger donation tax, consider donating a fixed amount instead. 
 
Here's the second implication you need to be aware of.
 
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There's a time limit on paying your donation tax

 
2. You have 30 days after the donation to declare it and pay the tax
If your donation does trigger donation tax, you must declare it within 30 days and pay it straight after.
 
If you don't, SARS could audit your business and you could face 200% penalties.
 
So go on and get behind Movember, but first consider these tax implications before you make any large donations to your office team. 
 
Check out the Practical Tax loose leaf Service for more on donation tax. 
 

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