Does SARS still require PROOF of the tax free Donations made of R100 000, done to a trust, when submitting a IT144 Donations form to SARS, as this had always been the case and have heard that it is no longer a requirement?
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
We accept from your request that you are not referring to the donations that are exempt from donations tax in terms of section 56(1) of the Income Tax Act. For purposes of our guidance that follows we therefore accepted that it is section 56(2)(b) that you require guidance on. We also accept that the done is not a tax exempt person
In accordance with section 60(4) of the Income Tax Act, the payment of donations tax must be accompanied by a return in such form as prescribed by the Commissioner – in this instance it is the IT144 as you correctly pointed out. On this basis, it appears that the IT144 must be completed and submitted only once the cumulative value of property donated during the year of assessment exceed the section 56(2)(b) amount for the year (R100 000 in the case of a natural person). The form should then include all donations (including exempt one) made during the year of assessment.
In accordance with section 60(1), the donations tax is payable by the end of the month following the month during which a donation takes effect. Note that the exemption will apply in the order that the donations are made during the relevant year of assessment.
We are not sure what “proof of the tax free donations” you are referring to. Because of the onus of proof, under section 102 of the Tax Administration Act and the duty to keep records (section 29), the taxpayer (donor in this case) will have to be able to produce the relevant material if requested by SARS. In Part 3 of the IT144 it is specifically required to provide detail of how the property was donated. That would be the deed of donation – the form request that a copy thereof be attached (e.g. Notarial deed). That requirement has not changed.