Author: Nyasha Musviba

This is a specific receipt that is issued to a donor by an organisation that has been approved by the Commissioner under section 18A of the IT Act. A taxpayer making a bona fide donation in cash or of property made in kind is entitled to a deduction from his taxable income if the donation is supported by the necessary tax deductible receipt. 

  Base cost is the amount against which any proceeds upon disposal are compared in order to determine whether a capital gain or loss has been realised.   For assets held on the valuation date (1 October 2001) that were acquired before that date  base cost is equal to the “valuation date value” of the asset plus any further qualifying costs incurred on or after that date (paragraphs 20 and 25 of the Eighth Schedule).   For assets acquired on or after the valuation date the base cost of the asset generally comprises the costs incurred in acquiring the asset and improving it. Paragraph 20 of the Eighth Schedule sets out what costs qualify to be part of base cost.   An asset can also be deemed to be acquired for a base cost equal to the market value of the asset at the time of acquisition (for example, if Read More …

Donations tax is levied at a flat rate of 20% on the value of the property donated.  

Donations tax is payable on the total value of property disposed of (whether directly or indirectly) by a resident by means of a donation.  (“Donation” is the gratuitous disposal of a property in this case, without expecting something in return.)

Donors as individuals In terms of section 56(2) of the Income Tax Act, 1962, donations tax shall not be payable in respect of the sum of the values of all property disposed of under donations (by a donor who is a natural person), where it exceeds R100 000 during any year of assessment.  This came into operation on 1 March 2007 and is applicable in respect of any year of assessment commencing on or after that date.                                                                                     In other words, the first R100 000 of any bona fide donation will be free of donations tax.  It should be noted that this amount is the maximum allowed (in totality) per year of assessment. Donors other than individuals  For juristic persons such as private companies, the exemption is limited to R10 000 per year of assessment in respect of casual gifts.  However, where a year of assessment is less than 12 months, Read More …