Donations Tax Exemptions for Charitable Giving in South Africa

By | April 30, 2023

Charitable giving is a great way to support causes you care about while making a difference in the world. In South Africa, there are many non-profit organizations that rely on donations to continue their work. However, before making a donation, itis important to understand the tax implications of your gift.

In this article, we will take a closer look at donations tax exemptions for charitable giving in South Africa, including what qualifies as a charitable donation, how donations tax works, and the exemptions available to donors.

What is a Charitable Donation?

In South Africa, a charitable donation is a gift of money or property that is made to a registered public benefit organization (PBO). 

PBOs are non-profit organizations that are approved by the South African Revenue Service (SARS) and are exempt from paying income tax.

Charitable donations can be made to a wide range of PBOs, including organizations that support education, health, social welfare, and the environment. 

However, it is important to ensure that the organization you are donating to is registered with SARS and qualifies as a PBO.

Donations Tax in South Africa

Donations tax is a tax that is levied on the transfer of property or money by one person to another as a donation. 

In South Africa, donations tax is governed by the Estate Duty Act and is payable by the person making the donation.

Who is Liable for Donations Tax?

The person who makes the donation is liable for paying donations tax. However, there are some exceptions to this rule. 

If a company makes a donation, the company is liable for the donations tax. If the donation is made by a trust, the trustee is responsible for paying the tax.

Donations Tax Rates in South Africa

The donations tax rate in South Africa is currently set at 20%. This means that if you make a donation of R100,000, you will be required to pay R20,000 in donations tax.

When is Donations Tax Due?

Donations tax is due within one month of making the donation. However, if the donation is made between 1 March and 28 February of the following year, the tax is due on 28 February of that year.

How to Claim a Donations Tax Exemption

If you make a charitable donation in South Africa, you may be eligible for a donations tax exemption. 

To claim an exemption, you will need to provide SARS with proof of the donation, such as a receipt or a letter from the PBO.

Exemptions for Charitable Donations in South Africa

There are several exemptions available for charitable donations in South Africa. 

These exemptions are designed to encourage individuals and companies to donate to PBOs and support their work.

One of the most significant exemptions is the section 18A exemption. This exemption allows donors to deduct the value of their donation from their taxable income, up to a certain limit. 

To qualify for this exemption, the donation must be made to a PBO that has been approved by SARS and has a section 18A status.

The amount of the deduction will depend on the type of donation and the donor’s income tax bracket. 

For example, individuals who earn less than R350,000 per year can claim a deduction of up to 10% of their taxable income, while those who earn more than R1.5 million per year can claim a deduction of up to 5% of their taxable income.

In addition to the section 18A exemption, there are several other exemptions available for charitable donations in South Africa. These include:

  • Small donations exemption: Donations of less than R100,000 per year are exempt from donations tax.
  • Spousal exemption: Donations between spouses are exempt from donations tax.
  • Donations to certain public benefit organizations: Donations to certain PBOs, such as universities and public schools, are exempt from donations tax.
  • Donations to approved government entities: Donations to approved government entities, such as the National Disaster Relief Fund, are exempt from donations tax.

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