Unit 8 Flashcards
Donations Tax
Which sections apply to Donations Tax?
Sections 54 to 64 of ITA
What taxes does Donations Tax avoid?
Normal Tax
Estate Duty
At what rate is Donation Tax levied?
20% for first R30 000 000
25% for amount over R30 000 000
Are residents & non-residents taxed?
Only RESIDENTS are taxed.
Donations from non-residents are not taxed ito Donations Tax
To what does sec 18A apply?
Donations to Public Benefit Organisations, which are deductible from normal tax
What elements is required in a donation?
A gratuitous elements (i.e. not quid pro quo)
What are the steps to calculating donations tax? (6)
- Identify disposal by resident
- Determine donation (deemed)
- Specifically exempt
- Determine value of donation - consideration
- General exemption
- Multiply with 20%
What is the definition of Property?
Any right in or to property
Movable / immovable
Corporeal / incorporeal
Wherever situated (inside or outside RSA)
[Also relates to copyright, patents, trade marks]
What is the definition of Donation?
Any gratuitous disposal of property
Any gratuitous waiver/renunciation of a right
What are excluded as donations? (2)
Rendering services for free (i.e. pro bono work)
Granting of interest-free loan
Definition of a Donee?
Any beneficiary under a donation
What is the position of a Trustee ito Donations Tax? (3)
Pays in his capacity
Recoverable from trust
Even if trust deed provides differently
What does an oral donation take effect?
On date of delivery
When does a donation take effect?
When all statutory requirements are met
Promise to deliver (when in writing)
What is crucial (from the donee) for a donation to take place?
Acceptance
General elements of which area of the law applies to Donations Tax?
Contract law
What are deemed donations?
When there is a difference in price between the Sale Price and the Market Value
Name 5 Specific Exemptions from donations tax
Matrimonial property contract
Donation mortis cause
Donation cancelled within 6 months after in effect
Donation of property BY (not to) trust
Bona fide contributions to maintenance of person
What is the general exemption applicable to non-natural persons?
R10 000
All casual gifts (wedding gifts, birthday gifts, etc.)
Proportional adjustment (if YOA shorter)
What is the general exemption applicable to natural persons?
R 100 000 each year
(But, estate duty becomes due if trust exceeds R3 500 000)
No proportional adjustment
Who is liable for donations tax ito a corporate body?
The person who instructs the corporate body is personally responsible for donations tax
When must payment be made?
Within next month within which donation took effect (SARS may grant longer period)
If a donor omits to pay, who pays?
Donor & donee jointly and severally responsible
