Donations are a common way to transfer wealth or assets without receiving anything in return. In South Africa, donations tax applies to individuals or entities that give away property or rights free of charge. To ensure compliance with the South African Revenue Service (SARS), donors must complete the Donations Tax Declaration Form (IT144) when making taxable donations.
This article explores the key aspects of donations tax, the process of completing the IT144 form, and the latest update from SARS regarding its use.
What is Donations Tax?
Donations tax is a levy imposed by SARS on the transfer of property or rights without compensation. This ensures that taxpayers do not use donations as a means to avoid paying estate duty or income tax.
Donations Tax Rates
The current donations tax rates are:
- 20% for donations valued below R30 million.
- 25% for donations exceeding R30 million.
The donor (the person making the donation) is responsible for paying donations tax. If the donor does not pay the tax, the donee (the recipient of the donation) may be held liable.
Who Needs to Complete the Donations Tax Declaration Form?
The IT144 form must be completed by any person or legal entity that makes a taxable donation. This includes:
- Individuals
- Companies
- Trusts
After making a donation, the donor must complete and submit the form to SARS along with the applicable tax payment.
Exemptions from Donations Tax
Certain donations are exempt from donations tax, including:
- Annual Exemption for Individuals – The first R100,000 of donations made by an individual in a tax year is exempt from donations tax.
- Spousal Donations – Donations between spouses are exempt from donations tax.
- Public Benefit Organisations (PBOs) – Donations to approved PBOs are exempt.
- Casual Gifts – Small gifts given for personal reasons and not exceeding R10,000 in total per year by a juristic person (e.g., a company) are exempt.
- Foreign Donations – Donations made to non-residents (provided they are not related to a South African taxpayer) are not subject to donations tax.
How to Complete and Submit the IT144 Form
- Download the Form – The IT144 form is available on the SARS Donations Tax Webpage.
- Fill in the Donor’s Details – Provide your personal information, including tax reference number and contact details.
- Provide Details of the Donation – Enter:
- Description of the donated asset
- Value of the donation
- Date of donation
- Calculate the Donations Tax – Apply the 20% or 25% tax rate based on the donation value.
- Declare Any Exemptions – If the donation qualifies for an exemption, provide relevant details.
- Submit the Form to SARS – Send the completed IT144 form via eFiling or manually at a SARS branch.
- Pay the Tax – Donations tax must be paid within 3 months of making the donation.
Failure to submit the form and pay the tax on time may result in penalties and interest.
Challenges with the IT144 Form & SARS Update
Many taxpayers have reported difficulties in completing the current IT144 form. To address this, SARS has reintroduced the previous PDF version of the form for immediate use until further enhancements are made.
Where to Get the Updated Form?
The correct version of the IT144 form can be accessed on the Donations Tax Webpage on SARS’s official website.
Learn More: How to Check If You Owe SARS Money & What to Do Next: A Step-by-Step Guide
Key Takeaways
- Donations tax is payable at 20% (below R30 million) and 25% (above R30 million).
- The donor is responsible for completing the IT144 form and paying the tax.
- Certain donations, like those to spouses or PBOs, are exempt.
- The tax must be paid within 3 months of making the donation.
- SARS has temporarily reintroduced the older IT144 form to assist taxpayers.
For more details and to download the updated IT144 form, visit the SARS Donations Tax Webpage.
