Can an individual still make a cash donation of up to 100 000 Rand per annum tax free or does the R100 000 annual exemption only apply to property donated?
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
It is not that a donation (in cash or otherwise) “of up to R100 000 per annum” is tax free.
In terms of section 54, of the Income Tax Act, donations tax must be paid “on the value of any property disposed of (whether directly or indirectly and whether in trust or not) under any donation by any resident (… referred to as the donor).”
Section 56(2)(b) of the Act, and relevant to your request, then provides that “donations tax shall not be payable in respect of … so much of the sum of the values of all property disposed of under donations by a donor who is a natural person as does not during any year of assessment exceed R100 000 …”
Section 56 has always referred to property (the values of all property disposed of under donations). There was no change in that wording. Remember that cash will in fact also be property. It is clear that the exemption applies to the cumulative value of donations made during the year of assessment. In other words, the R100 000 cash donated must be added to the value of property donated before that time and donations tax will be payable on the amount that exceeds the R100 000.