Page 47 - Donation Tax & VAT class slides
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DONATION TAX
Illustrative example -solution
• All of the above taxable donations will be exempt from donations tax, as the
first R100 000 of donations made by a natural person during a tax year are
exempt from donations tax (section 56(2)).
• The R100 000 must be applied in the order that the donations take place, as
donations tax must be calculated separately on each of the donations as and
when they take place. Donations tax is payable by the end of the month
following the month in which the donation takes effect.
• If Barry sells the property at the market value of R500 000 to the Butterbean Family Trust
and the purchase price is settled with an interest-free loan from himself, he is deemed to
have made a continuing donation in terms of section 7C (with effect from 1 March 2017) and
donations tax may be payable. The deemed donation is NOT the amount of the selling price,
but is rather equal to the foregone interest during the year. The donation is deemed to have
been made to the Butterbean Family Trust on 28 February 2018 (in terms of the provisions
of section 7C).
• Also, for income tax purposes, an interest-free loan is a continuing donation in
terms of section 7. Both these sections will further be dealt later.
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