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Don't let the spirit of generosity land you in trouble with SARS

by , 21 July 2014
With Mandela Day last Friday, you may still be feeling that giving spirit. Suddenly the urge to change the world for the better has taken over your company.

So you decide to make several sizable donations to help better the world. But before you put another cheque in the mail, let me warn you: There are tax consequences of making more than one donation.

That giving spirit may be great for humanity, but it could just land you in trouble with SARS.

Read on to discover how your generosity will affect your company taxes...

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Here are the consequences of making more than one donation

 
You can make a donation to a Public Benefit Organisation (PBO) and if it's less than 10% of your company's taxable earnings for the year, you can actually claim the donation as a tax deduction.
 
But this becomes complicated when you make more than one donation. 
 
You must declare all of your donations and then SARS will calculate them in the order you made them in. So if your company's first donation exceeds R10 000, your tax exemption will come off that amount. 
 
From then on, you'll have to pay normal donations tax on each donation. 
 
Here's how much and when you'll have to pay that tax...
 

Here's when and how much tax you'll have to pay on your extra donations

 
Donations tax is 20% of the value of the donation. So on a donation of R10 000, you pay R2 000 in tax.
 
You have to pay the tax at the end of the next month after you made the donation. So if your generous Mandela Day spirit has led you to make a donation this month, you must pay the tax by the end of August.
 
Now that you know about the consequences of those donations you can make them more wisely.
 
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