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Have you made a donation? Find out if it'll be considered an allowable deduction or not

by , 10 January 2014
Do you or your company regularly make donations? If so, read on find out whether or not your donation will be an allowable deduction.

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
  •  When your company disposes of property, at the request of any person. When you make the disposal, SARS sees that property as having been disposed of under a donation.

When does a donation take effect?

A donation will take effect when you meet these legal requirements:

  • The person you're donating to must accept the donation; and
  • The donee must take delivery of the item. But if both parties agree, in writing, that you'll give them the item at a future date, the effective date of the donation is the date you sign the contract.

When will your donation be considered an allowable deduction?

If you donate to a public benefit organisation (PBO) that's approved to issue Section 18A receipts, or to the government, your donation will be an allowable deduction.

But this allowance is limited to a maximum of 10% of your taxable income for the year.

Here's a useful tip for you: The Practical Tax Loose Leaf Service recommends you get the necessary Section 18A Receipt from the public benefit organisation to prove your donation.

This receipt is any form of documentation that proves the PBO received your donation.

Well there you have it. If you make a donation to a public benefit organisation (PBO) or to the government, your donation will be considered an allowable deduction. This will only be the case if you made the donation to a PBO that's authorised to issue S18A receipts.

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