Tax residents of South Africa are subject to donations tax. The act of giving away an asset or disposing thereof at less than its market value, motivated by sheer generosity or disinterested benevolence, could amount to a donation.
Donations tax is payable at the rate of 20% on the value of the asset donated and 25% on the portion of donations that exceed R30 million per annum. The tax is payable by the donor within 2 months of the donation taking effect. Should the donor not pay this tax within the prescribed period, the donor and donee become jointly and severely liable for the tax.
Certain donations are exempt, such as donations between spouses and an annual exemption of R100,000 is available for natural persons. The rules applying to donors other than natural persons are more complicated, but casual gifts of up to R10,000 per annum fall outside the net.
If you have further questions in this regard, please contact us at info@stbb.co.za.