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Section 56 (ITA) – Exemptions

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56.     Exemptions

(1)     Donations tax shall not be payable in respect of the value of any property which is disposed of under a donation –

(a)     to or for the benefit of the spouse of the donor under a duly registered antenuptial or post–nuptial contract or under a notarial contract entered into as contemplated in section 21 of the Matrimonial Property Act, 1984 (Act No. 88 of 1984);

(b)     to or for the benefit of the spouse of the donor who is not separated from him under a judicial order or notarial deed of separation;

(c)     as a donatio mortis causa;

(d)     in terms of which the donee will not obtain any benefit thereunder until the death of the donor;

(e)     which is cancelled within six months from the date upon which it took effect;

(f)      made by or to or for the benefit of any traditional council, traditional community or any tribe referred to in section (10)(1)(t)(vii);

(g)     if such property consists of any right in property situated outside the Republic and was acquired by the donor –

(i)      before the donor became a resident of the Republic for the first time; or

(ii)     by inheritance from a person who at the date of his death was not ordinarily resident in the Republic or by a donation if at the date of the donation the donor was a person (other than a company) not ordinarily resident in the Republic; or

(iii)    out of funds derived by him from the disposal of any property referred to in sub-paragraph (i) or (ii) or, if the donor disposed of such last-mentioned property and replaced it successively with other properties (all situated outside the Republic and acquired by the donor out of funds derived by him from the disposal of any of the said properties), out of funds derived by him from the disposal of, or from revenue from any of those properties; or

(gA)   ……….

(h)     by or to any person (including any sphere of government) referred to in section 10(1)(a), (cA), (cE), (cN), (cO), (cQ), (d) or (e);

[Paragraph (h) substituted by section 38 of Act 85 of 1974, section 23 of Act 96 of 1981, section 21 of Act 85 of 1987, section 28 of Act 141 of 92, section 32 of Act 113 of 1993, section 38 of Act 30 of 2000, section 38 of Act 8 of 2007, section 67 of Act 7 of 2010 and section 67 of Act 43 of 2014 effective on 1 March 2015]

(i)      ……….

(j)      ……….

(k)     as a voluntary award –

(i)      the value of which is required to be included in the gross income of the donee in terms of paragraph (c), (d) or (i) of the definition of ‘gross income’ in section 1; or

(ii)     the gain in respect of which must be included in the income of the donee in terms of section 8A, 8B or 8C;

(l)      if such property is disposed of under and in pursuance of any trust;

(m)    if such property consists of a right (other than a fiduciary, usufructuary or other like interest) to the use or occupation of property used for farming purposes, for no consideration or for a consideration which is not an adequate consideration, and the donee is a child of the donor;

(n)     on or after the seventeenth day of August, 1966, by any company which is recognized as a public company in terms of section 38;

(o)     where such property consists of the full ownership in immovable property, if –

(i)

(aa)   such immovable property was acquired by any beneficiary entitled to any grant or services in terms of the Land Reform Programme, as contemplated in the White Paper on South African Land Policy, 1997; and

(bb)   the Minister of Land Affairs or a person designated by him has, on such terms and conditions as such Minister may in consultation with the Commissioner prescribe, approved the particular project in terms of which such immovable property is so acquired; or

[Subparagraph (i) substituted by section 61 of Act 15 of 2016 effective on 1 March 2016, applies in respect of any donation made on or after that date]

(ii)     such immovable property was acquired by a person in terms of land reform initiatives by virtue of the measures as contemplated in Chapter 6 of the National Development Plan: Vision 2030 of 11 November 2011 released by the National Planning Commission, Presidency of the Republic of South Africa;

[Subparagraph (ii) substituted by section 61 of Act 15 of 2016 effective on 1 March 2016, applies in respect of any donation made on or after that date]

(p)     ……….

(q)     ……….

(r)      by a company to any other company that is a resident and is a member of the same group of companies as the company making that donation.

(2)     Donations tax shall not be payable in respect of –

(a)     so much of the sum of the values of all casual gifts made by a donor other than a natural person during any year of assessment as does not exceed R10 000: Provided that where the year of assessment exceeds or is less than 12 months, the amount in respect of which the tax shall not be payable in terms of this paragraph shall be an amount which bears to R10 000 the same ratio as that year of assessment bears to twelve months.

(b)     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;

(c)     so much of any bona fide contribution made by the donor towards the maintenance of any person as the Commissioner considers to be reasonable.

“Fair market value” definition of section 55 of ITA

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“fair market value”, means –

 

(a)     the price which could be obtained upon a sale of the property between a willing buyer and a willing seller dealing at arm’s length in an open market; or

 

(b)     in relation to immovable property on which a bona fide farming undertaking is being carried on in the Republic, the amount determined by reducing the price which could be obtained upon a sale of the property between a willing buyer and a willing seller dealing at arm’s length in an open market by 30 per cent;

“Donee” definition of section 55 of ITA

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“donee” means any beneficiary under a donation and includes, where property has been disposed of under a donation to any trustee to be administered by him for the benefit of any beneficiary, such trustee: Provided that any donations tax paid or payable by any trustee in his capacity as such may, notwithstanding anything to the contrary contained in the trust deed concerned, be recovered by him from the assets of the trust;

Section 54 (ITA) – Levy of donations tax

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54.    Levy of donations tax

 

Subject to the provisions of section 56, there shall be paid for the benefit of the National Revenue Fund a tax (in this Act referred to as donations tax) on the value of any property disposed of (whether directly or indirectly and whether in trust or not) under any donation by any resident (in this Part referred to as the donor).

Section 49G – Refund of withholding tax on royalties

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49G.    Refund of withholding tax on royalties

 

(1)     Notwithstanding  Chapter 13 of the Tax Administration Act, if-

 

(a)     an amount is withheld from a payment of a royalty as contemplated in section 49E(1);

 

(b)     a declaration contemplated in section 49E(2) or (3) in respect of that royalty is not submitted to the person paying that royalty by the date of the payment of that royalty; and

 

(c)     a declaration contemplated in section 49E(2) or (3) is submitted to the Commissioner within three years after the payment of the royalty in respect of which the declaration is made,

 

so much of that amount as would not have been withheld had that declaration been submitted by the date contemplated in the relevant subsection is refundable by the Commissioner to the person to which the royalty was paid.

[Subsection (1) inserted by section 12(1) of Act 21 of 2012 and renumbered by section 5 of Act 24 of 2020]

 

(2)     Notwithstanding Chapter 13 of the Tax Administration Act, if—

 

(a)     an amount of withholding tax on royalties is paid as contemplated in section 49E(1) in respect of an amount of royalties that became due and payable; and

 

(b)     the amount of royalties subsequently becomes irrecoverable,

 

so much of that amount as would not have been paid had the royalties not become due and payable is refundable by the Commissioner to the person who paid the tax.

[Subsection (2) added by section 5 of Act 24 of 2020]