When a taxpayer donates an asset, the obvious tax consequence to consider is donations tax that could arise on the donation. However, a donation of an asset could give rise to a variety of other normal income tax consequences for the donor and/or done.
Many taxpayers make decisions based on the tax implications of the options available to them. If they do not identify all the relevant tax consequences, their decision will not be based on accurate information, and they might be out-of-pocket due to unforeseen tax consequences arising.
Similarly, if a taxpayer receives an asset from another taxpayer, it is important that the taxpayer understand all the tax consequences that result from the donation received.
Donations tax is levied on the transfer of wealth during the life of a person whereas estate duty is levied on the transfer of wealth to beneficiaries when a person passes away, through the deceased person’s deceased estate.
Short course content (self-paced)
OUTCOMES OF TOPIC
After studying this introduction to donations made and donations tax, you should be able to: