A donation, to be deemed as a “bona fide donation” for tax purposes, must be seen as a “gratuitous” disposal of property – in other words:
- must be given for free or at no charge
- the donee (i.e. the person receiving the donation) must not be expected to give anything in return
- it must not be confused with a “gift” – this could become relevant if the donor is in debt with SARS for example which could then give raise to an investigation
- A donation can be in the form of cash, an asset (e.g. a car, a piece of furniture, a painting), immovable property (e.g. land, house, etc.)
Includes a “gratuitous waiver” or “renunciation of a right”
Requires an element of sheer “liberality” by the donor – this highlights that the “transaction” is gratuitous in nature
Where there is an expectation of something to be given in return – it’s not seen as a donation (i.e. it’s a payment or a bribe!)
Once it’s determined that a bona fide donation has been made – the tax implications have to be considered – they are:
- is donations tax payable?
- is the donation tax deductible?