Manage Donations Tax Effectively: Key Changes and Tips for Compliance

Donations tax is an important consideration for individuals and businesses making financial contributions to others. Understanding the latest changes and compliance requirements is crucial to avoid penalties and ensure tax efficiency. Here’s what you need to know.

Key Changes to Donations Tax

1. Threshold Adjustments – The annual exemption for donations tax remains at R100,000 for individuals, while companies and trusts are subject to a 20% tax rate on donations exceeding this threshold.
2. Reporting Requirements – SARS has enhanced reporting obligations to ensure all donations exceeding the threshold are disclosed. Taxpayers must complete the IT144 form and submit it with their tax return.
3. Exempt Donations – Certain donations remain exempt, including those to qualifying public benefit organisations (PBOs) and donations between spouses.

Tips for Compliance and Tax Efficiency

• Plan Your Donations – Consider structuring your donations within the annual R100,000 exemption to minimise tax liability.
• Maintain Proper Records – Keep detailed records of all donations, including proof of payments and acknowledgments from recipients.
• Utilise PBO Exemptions – Donations to SARS-approved PBOs may qualify for tax deductions, reducing overall tax liability.
• Seek Professional Advice – Our tax practitioner scan help optimise donation strategies and ensure compliance with SARS regulations. For more information, contact PRNC today.