Unit 8

Question 1

Which sections apply to Donations Tax?

Answer 1

Sections 54 to 64 of ITA

Question 2

What taxes does Donations Tax avoid?

Answer 2

Normal Tax

Estate Duty

Question 3

At what rate is Donation Tax levied?

Answer 3

20% for first R30 000 000

25% for amount over R30 000 000

Question 4

Are residents & non-residents taxed?

Answer 4

Only RESIDENTS are taxed.

Donations from non-residents are not taxed ito Donations Tax

Question 5

To what does sec 18A apply?

Answer 5

Donations to Public Benefit Organisations, which are deductible from normal tax

Question 6

What elements is required in a donation?

Answer 6

A gratuitous elements (i.e. not quid pro quo)

Question 7

What are the steps to calculating donations tax? (6)

Answer 7

1. Identify disposal by resident
2. Determine donation (deemed)
3. Specifically exempt
4. Determine value of donation - consideration
5. General exemption
6. Multiply with 20%

Question 8

What is the definition of Property?

Answer 8

Any right in or to property
Movable / immovable
Corporeal / incorporeal
Wherever situated (inside or outside RSA)
[Also relates to copyright, patents, trade marks]

Question 9

What is the definition of Donation?

Answer 9

Any gratuitous disposal of property

Any gratuitous waiver/renunciation of a right

Question 10

What are excluded as donations? (2)

Answer 10

Rendering services for free (i.e. pro bono work)

Granting of interest-free loan

Question 11

Definition of a Donee?

Answer 11

Any beneficiary under a donation

Question 12

What is the position of a Trustee ito Donations Tax? (3)

Answer 12

Pays in his capacity
Recoverable from trust
Even if trust deed provides differently

Question 13

What does an oral donation take effect?

Answer 13

On date of delivery

Question 14

When does a donation take effect?

Answer 14

When all statutory requirements are met

Promise to deliver (when in writing)

Question 15

What is crucial (from the donee) for a donation to take place?

Answer 15

Acceptance

Question 16

General elements of which area of the law applies to Donations Tax?

Answer 16

Contract law

Question 17

What are deemed donations?

Answer 17

When there is a difference in price between the Sale Price and the Market Value

Question 18

Name 5 Specific Exemptions from donations tax

Answer 18

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

Question 19

What is the general exemption applicable to non-natural persons?

Answer 19

R10 000
All casual gifts (wedding gifts, birthday gifts, etc.)
Proportional adjustment (if YOA shorter)

Question 20

What is the general exemption applicable to natural persons?

Answer 20

R 100 000 each year
(But, estate duty becomes due if trust exceeds R3 500 000)
No proportional adjustment

Question 21

Who is liable for donations tax ito a corporate body?

Answer 21

The person who instructs the corporate body is personally responsible for donations tax

Question 22

When must payment be made?

Answer 22

Within next month within which donation took effect (SARS may grant longer period)

Question 23

If a donor omits to pay, who pays?

Answer 23

Donor & donee jointly and severally responsible