Mr and Mrs McDonald (married in c.o.p) lent money to daughter (not SA resident) R740 000 on 16 June 2015 - 7% Interest per loan agreement. Client decided to write off R100 000 donation each against loan for tax years (2016, 2017, 2018, 2019) and small amo
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
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. 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 – being each spouse). The form should then include all donations (including exempt one) made during the year of assessment.
We suspect that the parties have also not declared the deemed donation that arose under section 31 of the Income Tax Act.
A voluntary disclosure, for the primary adjustment, would be appropriate and in the years of assessment where the R100 000 amount was exceeded, one would also be appropriate.