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Give a little back this Mandela Day and your company could get something in return

by , 18 July 2014
With Mandela Day today, it's time for all of us to give back. But it's not just you as an individual who can give back, your company can too!

But there's an added benefit here. Being a company that gives to charity isn't just great for your public image, it can also be good for your tax bottom line.

That's right! If you donate to a Public Benefit Organisation (PBO) SARS will reward your good deed with a tax deduction.

Here's how it works...

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Legally pay less tax
 
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Beware of the difference between donation tax and donation tax deductions

 
You must be careful when it comes to donations because SARS won't always see it as a good natured gesture. It may see it as a way to dispose of an asset without paying Capital Gains Tax.
 
This is why, when you make a donation to an organisation that isn't a PBO, you'll have to pay donation tax of 20% of the value of the donation.
 
So, for example, if you donate R10 000 to a charity, you'll have to pay R2 000 tax on that donation. 
 
But, to avoid this extra tax, apply these rules to your good deed and get a donation tax deduction too...
 
Apply these rules to your Mandela Day good deed to avoid donation tax
 

Remember, only donations to PBOs count for tax deductions instead of donation tax

 
Examples of PBOs are: 
 
- Assets Youth Initiative;
- Boys Town South Africa;
- Cape Town City Mission;
- Deafblind South Africa;
- Durban Girls College Development Fund;
- Fort Hare Foundation; and
- Future Hope Trust.
 
You can find a whole list of PBOs that SARS has approved right here.
 
The next rule is the donation is limited to a maximum of 10% of your company's taxable income for the year.
 
So keep these rules in mind before your company sets out to change the world!
 
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Every South African tax law explained by our experts
 
 
All the definitions and legal regulations, useful advice, exceptions to the rules that help you slip through the legislative jungle of taxes. 
Case studies and practical examples that show you what elements you should consider for your taxes to be perfect.
Red flags you need to watch out for and the penalties you'll face if you don't respect them.
Sample templates at your disposal, ready to be filled in, customised and printed. 
 
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