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THOUGHT OF THE WEEK Exemptions from donation tax for non-residents in South Africa

Updated: Apr 7, 2020

A donation is the gratuitous disposal of an asset or any gratuitous waiver or renunciation of a right. This implies that there is no gain in return for the donation. Ordinarily, donations are taxed at a rate of 20% (and 25% if the amount exceeds R30 million).

Fortunately, there is an exemption for individuals in respect of donations below R100 000 per year of assessment, in which case no donation tax is payable. In instances where donation tax applies, but the donor fails to settle the liability within the payment period, the donee (person receiving the donation) becomes jointly and severally liable with the donor to settle the tax obligation.

Donations tax however only applies to tax residents of South Africa and therefore donations made by tax non-residents fall outside the ambit of the above provisions. We strongly suggest that tax advice be sought in the country where the donor is a tax resident.

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This article is not intended to constitute legal advice and is produced for information purposes only and to provide a general understanding of the legal position relating to the topic. It is recommended that advice relating to the specific circumstances of your situation be sought from our attorneys before acting upon the content of this article. This article was written at a particular point in time and accordingly may not always reflect the most recent legal developments, if any, applicable to the relevant topic. Kaplan Blumberg and its partners and/or employees, are not responsible for any consequences which may follow upon any decision taken to act upon the information provided in this article.

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