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SARS wants to know if the people settling Malema's tax bill are paying donations tax!

by , 26 August 2014
The provisional sequestration order against Economic Freedom Fighters' leader, Julius Malema, regarding his outstanding tax bill has been extended to December 1, reports News24.

But Malema's not off the hook yet.

SARS will use the extension to investigate who's been settling his R18 million tax bill ever since he reached a tax compromise agreement with the taxman.

According to The City Press, SARS wants to find out whether any dirty money was used to settle Malema's tax bill. If it had been, it would jeopardise the agreement between Malema and SARS. The other important thing SARS wants to find out is if the people financing the payments are paying donations tax on their contributions.

If, like most business owners, you're wondering how donations tax works, here's what you need to know so you'll never get in trouble with SARS for your good deed.

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What you need to know about donations tax

Donations tax is the tax SARS imposes on you if you dispose of your 'property'. For donations tax purposes, 'property' includes:

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

So when you donate any of the above, you'll have to account for donations tax.

How much donations tax will you pay?

The Practical Tax Loose Leaf Service says you'll pay 20% of the value of the donation.

In this article, we explain that you must pay donations tax before the end of the month following the month the donation took effect. And you must complete and submit an IT 144 when you declare and pay donations tax

Just bear in mind that if you're an individual (a 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.

If you fail to account for donations tax, SARS will come after you like it's doing in the Malema matter. So make sure you comply now that you know how donations tax works.

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