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Did you know: There are seven types of property you'll pay donations tax on?

by , 05 May 2014
One of the most misunderstood tax topics is Donations Tax. If you want to navigate the Donations Tax maze well and avoid hefty penalties, continue reading to find out what SARS classifies as a donation and the seven types of property you'll pay Donations Tax on.


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What is a donation?

The Practical Tax Loose Leaf Service says a donation is when:

  • You give something away for free;
  • You get rid of something for a lesser price than it's worth; or
  • A company disposes of property, at the request of any person.

For example, Peter supports WellNess, a welfare organisation that survives on donations. Peter approaches BeneCo (Pty) Ltd and asks them to donate some money to WellNess. BeneCo agrees and pays WellNess R100 000. The R100 000 will be a deemed dividend in Peter's name (not the company's!).

And this is where Donations Tax comes in.

Donations Tax is the tax SARS'll impose on you if you dispose of your property.

In the above example, Peter will have to pay the Donations Tax.

The good news is he'll be able to get a small deduction for tax against his income when he submits his annual return. And BeneCo probably won't be allowed to deduct the donation as it isn't an expense 'in the production of income'.

If you want to find out about tax deductible donations, click here.

Now let's get to the seven types of property you'll pay donations tax on.


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Seven types of property you'll pay donations tax on

Property, for donations tax, can be any of the following:

  1. Cash;
  2. Homes;
  3. Farms;
  4. Cars;
  5. Trademarks;
  6. Shares; and
  7. Anything else, corporeal or incorporeal, that has a value.

If you want more info on Donations Tax, how much Donations Tax you'll have to pay and when a donation takes effect, check out the Practical Tax Loose Leaf Service and get your company's Donations Tax right.

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