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.