Donor tax benefits
Deduction of donations
A taxpayer making a bona fide donation in cash or in kind to the St David’s Marist Foundation (an organisation approved in terms section 18A of the Income Tax Act, no. 58 of 1962) is entitled to a deduction from his/her taxable income of the amount donated. The St David’s Marist Foundation will issue the donor with a receipt entitling him/her to claim the donated amount as a deduction.
Prior to 1 March 2014 the amount of the donation was limited to 10% of the donor’s taxable income. However, with effect from 1 March 2014 donations in excess of 10% will no longer be fully lost as a deduction. Instead, the excess will be rolled over and allowed as a deductible deduction in the subsequent year of assessment (subject to the 10% rule). If any excess remains, the excess can be further rolled over again. As an example:
Year 1:
Taxable income: R1-million
Allowable donation as a deduction: R100 000
Actual donations made: R150 000
Deduction claimed: R100 000
Amount rolled over: R50 000
Year 2:
Taxable income: R1.5-million
Allowable donation as a deduction: R150 000
Actual donations made: R0
Deduction claimed (incl. roll over): R50 000
Amount rolled over: R0
A taxpayer may claim a deduction for donations in kind made to the St David’s Marist Foundation. The amount of the deduction to be allowed in these circumstances is set out in section 18A of the Income Tax Act, no. 58 of 1962.
No deduction will be allowed in respect of any property donated in kind which constitutes or is subject to any fiduciary, usufructuary or similar right or which constitutes an intangible asset. A donation of a financial instrument is deductible only if it is a share in a listed company or issued by a “financial institution” defined in the Financial Services Board Act, no. 97 of 1990.
Exemption from other taxes and duties
Donations tax
Donations tax is levied at a rate of 20% on any gratuitous disposal of property by one person to another, including the disposal of property at less than its market value. However, donations made to a registered Public Benefit Organisation, such as the St David’s Marist Foundation, are exempt from donations tax. Furthermore, as a donation made to the St David’s Marist Foundation is exempt it will not erode an individual’s annual donations exemption amount, currently R100 000.
Estate duty
Estate duty is levied at the rate of 20% on the net estate of a deceased person. Any property bequeathed to a registered Public Benefit Organisation, such as the St David’s Marist Foundation, is excluded from the estate and therefore not subject to estate duty.
Transfer duty
Transfer duty is levied on a sliding scale on the value of fixed property acquired by any person. The rates vary from 0% to 8% in the case of natural persons.
The St David’s Marist Foundation is exempt from the payment of transfer duty on property acquired, where the whole or substantially the whole of the property will be used for the purpose of carrying on one or more approved public benefit activities.
Capital gains tax
Any taxable capital gain of a person is included in the taxable income of that person.
Where a person donates an asset to the St David’s Marist Foundation which would have resulted in a liability for capital gains tax, the capital gain (or loss) will be excluded. As such, no capital gains tax is payable.
Should you require any additional information regarding any of the deductions available to you as a donor making a contribution to the St David’s Marist Foundation, or should you require any assistance in this regard, please contact the Foundation Manager on (011) 215 2058 or foundation@stdavids.co.za.