Client rec a gift of R1.8m from friend in Switzerland. Friend declared as gift in Switzerland and client also declared in SA at Reserve bank as a gift as well. Must client still pay 20% donation tax for amt above R100k even though the gift is from abroad?
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
You have indicated that the donor is not a ‘resident’ of the RSA – see section 1(1) of the Income Tax Act.
In terms of section 54, of this Act, “… there shall be paid … a tax (in this Act referred to as donations tax) on the value of any property disposed of (whether directly or indirectly and whether in trust or not) under any donation by any resident (in this Part referred to as the donor).”
Where the donor is not a resident, there is no donations tax payable in the RSA.
The donee, RSA resident, declares this as an amount “considered non-taxable’ on the return of income for the year of assessment that it was received.