’TIS THE SEASON FOR GIVING (AND RECEIVING TAX BENEFITS WHILE YOU DO)

Charitable donations can profoundly impact the community and individuals. Not only do they help organisations fulfil their missions, but they can also bring a sense of joy and purpose to the donors.

Moreover, there are also significant tax benefits associated with charitable giving. Let’s explore how donating can benefit you financially, particularly in the context of South African tax regulations.

Deductible donations

One of the key tax benefits of charitable giving is that your donations to eligible organisations can be tax-deductible. In South Africa, certain non-profit organisations (NPOs) and public benefit organisations (PBOs) qualify for deductible status. When you donate to these organisations, you can claim a deduction on your annual income tax return.

Here’s how it works: The amount you donate to a qualifying organisation (Section 18A-approved by SARS) can be subtracted from your taxable income. Let’s say your taxable income for the year is R500,000, and you donate R10,000 to a registered non-profit. By deducting the donation from your taxable income, you effectively lower your taxable income to R490,000, potentially reducing in the amount of tax you owe.

Remember to claim your Section 18A receipt from the beneficiary organisation, confirming that your donation is tax-deductible. By holding onto these receipts, you can easily prove your eligibility for deductions when filing your tax return.

Donations tax exemptions

SARS imposes tax on donations exceeding a certain threshold in a given year. If you plan to make substantial donations to a charitable organisation, be aware of this. If the donor is not a natural person, tax exemption on casual gifts is restricted to R10 000 per year, while the amount is R100 000 per year for a natural person.

However, the state also offers complete relief from donations tax in certain situations – like donations to spouses and approved PBOs. This exemption encourages charitable giving and makes it more financially viable for donors.

Estate duty savings

While you are in the spirit of giving, consider planning for the future, as your charity can outlive you. When you include charitable bequests in your will or make provisions for charitable donations in your estate plan, the value of those bequests or donations is deducted from your estate before calculating estate duty. This can lead to potential savings for your heirs and beneficiaries.

Seek Professional Advice

It is advisable to navigate the complexities of tax laws carefully and regulations to maximise the tax benefits of charitable giving. Consider seeking advice from a qualified tax professional or financial advisor who can help you give in the wisest way possible while staying tax compliant. 

Ultimately, charitable giving can be a win-win situation – you give back to your community, and the tax benefits give back to you.

If you need a partner in charity, feel free to contact our experienced team at Huysamen Westraad Inc. We would love to help you give!