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Making a donation this Mandela Day? Beware of the tax consequences

by , 18 July 2014
Mandela Day activities are underway.

Every year on this day (18 July), people all over the world devote 67 minutes of their time to helping others, as a way to mark the incredible spirit of Nelson Mandela.

Sadly, this year marks the first time the day is being commemorated without Mandela.

If you're planning to make a donation to a welfare organisation in honour of the great man and his values in serving humanity, we'd like to remind you to be aware of the tax consequences: Donations tax.

Keep reading to find out about the tax consequences of making a donation so you don't get into trouble with SARS for your good deed this Mandela Day.

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Here are the tax implications of making a donation this Mandela Day

Making a donation comes with tax consequences called donations tax.

It's the tax SARS imposes on you if you dispose of your property.

In terms of tax law, property, for donations tax, can be any of the following:

  • Cash;
  • Homes;
  • Farms;
  • Cars;
  • Trademarks;
  • Shares; and
  • Anything else, corporeal or incorporeal, that has a value.

So, if, for example, this Mandela Day, you make a R100 000 donation to a local welfare organisation that survives on donations, you'll have to pay donations tax of 20% of the value of the donation.

You must pay donations tax before the end of the month following the month the donation took effect. You must complete and submit an IT 144 when you declare and pay donations tax.

For example, if you donate R100 000 on Mandela Day, you must pay donations tax before the end of August. If you don't pay donations tax within this period, you'll both be jointly and severally liable for the tax.

There you have it: Make sure your donation doesn't get you in trouble with SARS this Mandela Day-account for donations tax correctly.

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