The Practical Tax Loose Leaf Service explains that a donation is when:
And, in terms of tax law, donations attract tax.
How much donations tax will you pay when you make a donation?
You'll pay 20% of the value of the donation.
But, if you're an individual (natural person), you can donate R100 000 per year of assessment, tax-free. If you're a company, you're allowed R10 000 per year of assessment.
Be warned: There are consequences if you make more than one donation.
If you make more than one donation in the year of assessment, SARS will calculate the donations in the order you make them.
So, if you're a company and your first donation exceeds R10 000, your exemption will come off that amount and you'll be taxed on all other donations you make during that same tax year.
When must you pay donations tax?
You must pay donations tax, before the end of the month following the month the donation took effect.
For example, if you donate R15 000 in May, you must pay R3 000 in tax before the end of June.
If you don't pay donations tax within this period, you'll both be jointly and severally liable for the tax.
You must complete and submit an IT 144 when you declare and pay donations tax.
Remember, only certain transactions are exempt from tax. The rest you'll have to pay donations tax on. So make sure you comply to avoid penalties.