62.    Value of property disposed of under donations

 

(1)     For the purposes of donations tax the value of any property shall be deemed to be –

 

(a)     in the case of any fiduciary, usufructuary or other like interest in property, an amount determined by capitalizing at twelve per cent. the annual value of the right of enjoyment of the property over which such interest was or is held, to the extent to which the donee becomes entitled to such right of enjoyment, over the expectation of life of the donor, or if such right of enjoyment is to be held for a lesser period than the life of the donor, over such lesser period;

 

(b)     in the case of any right to any annuity, an amount equal to the value of the annuity capitalized at twelve per cent. over the expectation of life of the donor, or if such right is to be held by the donee for a lesser period than the life of the donor, over such lesser period;

 

(c)     in the case of a right of ownership in any movable or immovable property which is subject to a usufructuary or other like interest in favour of any person, the amount by which the fair market value of the full ownership of such property exceeds the value of such interest, determined –

 

(i)      in the case of a usufructuary interest, by capitalizing at twelve per cent. the annual value of the right of enjoyment of the property subject to such usufructuary interest over the expectation of life of the person entitled to such interest, or, if such right of enjoyment is to be held for a lesser period than the life of such person, over such lesser period;

 

(ii)     in the case of an annuity charged upon the property, by capitalizing at twelve per cent. the amount of the annuity over the expectation of life of the person entitled to such annuity, or, if it is to be held for a lesser period than the life of such person, over such lesser period; or

 

(iii)    in the case of any other interest, by capitalizing at twelve per cent such amount as the Commissioner may consider reasonable as representing the annual yield of such interest, over the expectation of life of the person entitled to such interest, or, if such interest is to be held for a lesser period than the life of such person, over such lesser period;

 

(d)     in the case of any other property, the fair market value of such property as at the date upon which the donation takes effect: Provided that in any case in which, as a result of conditions which in the opinion of the Commissioner were imposed by or at the instance of the donor, the value of any property is reduced in consequence of the donation, the value of such property shall be determined as though the conditions in terms of which the value of the said property is reduced in consequence of the donation, had not been imposed.

 

(1A)  Where any company not quoted on any stock exchange owns immovable property on which bona fide farming operations are being carried on in the Republic, the value of such immovable property shall, in so far as it is relevant for the purposes of determining the value of any shares in such company, be determined in the manner prescribed in the definition of “fair market value” in section 55(1).

 

(2)     For the purposes of paragraphs (a) and (c) of subsection (1) the annual value of the right of enjoyment of a property means an amount equal to twelve per cent. upon the value of the full ownership of the property which is subject to any fiduciary, usufructuary or other like interest: Provided that –

 

(a)     where the Commissioner is satisfied that the property which is subject to any such interest could not reasonably be expected to produce an annual yield equal to 12 per cent on such value of the property, the Commissioner may fix such sum as representing the annual yield as may seem to him to be reasonable, and the sum so fixed shall for the purposes of paragraphs (a) and (c) of subsection (1) be deemed to be the annual value of the enjoyment of such property;

 

(b)     where the property which is subject to any such interest consists of books, pictures, statuary or other objects of art, the annual value of the right of enjoyment shall for the purposes of paragraph (a) of subsection (1) be deemed to be the average net receipts (if any) derived by the person entitled to such right of enjoyment of such property during the three years immediately preceding the date on which the donation took effect.

 

(3)     Where for the purposes of subsection (1) any calculation is required to be made over the expectation of life of any person, such calculation shall, in the case of a person who is not a natural person, be made over a period of fifty years.

 

(4)     If the Commissioner is of the opinion that the amount shown in any return as the fair market value of any property is less than the fair market value of that property, he or she may fix the fair market value of that property, and the value so fixed is deemed for the purposes of this Part to be the fair market value of such property.

 

(5)     In fixing the fair market value of any property in terms of subsection (4), the Commissioner shall have regard inter alia –

 

(a)     to the municipal or divisional council valuation (if any) of such property;

 

(b)     to any sworn valuation of such property furnished by or on behalf of the donor or the donee; and

 

(c)     to any valuation of such property made by any competent and disinterested person appointed by the Commissioner.

 

63.  ……….

61.    Extension of scope of certain provisions of Act for purposes of donations tax

 

For the purposes of the donations tax –

 

(a)     any reference in paragraph (a) or (e) of the definition of ‘representative taxpayer’ in section 1 to the income of any person or to the gross income received by or accrued to or in favour of any person shall be deemed to include a reference to property disposed of by any person under a donation or to the value of such property, as the context may require;

 

(b)     ……….

 

(c)     ……….

 

(d)     the reference in paragraphs (b) and (c) of the definition of “representative taxpayer” in section 1 to the income under the management, disposition or control of an agent or to income which is the subject of any trust, as the case may be, shall be deemed to include a reference to any property disposed of under a donation which is under the management, disposition or control of the agent or to property disposed of under a donation which is the subject of the trust, as the case may be;

 

(e)     ……….

 

(f)      ……….

 

(g)     ……….

[Paragraph (g) added by section 25 of Act 90 of 1962, substituted by section 29 of Act 90 of 1988 and deleted by section 3 of Act 23 of 2015 effective on 8 January 2016]

60.    Payment and assessment of the tax

(1)     Donations tax shall be paid to the Commissioner by the end of the month following the month during which a donation takes effect or such longer period as the Commissioner may allow from the date upon which the donation in question takes effect.

(2)     Where a donor has during the year of assessment disposed of property under more than one donation in respect of which an exemption may be applicable under the provisions of section 56 (2) (a) or (b), the amount to be exempted in respect of any such donation shall be calculated according to the order in which such donations took effect.

(3)     Where a donor has disposed of property under more than one donation on the same date those donations shall for the purpose of determining the tax payable in respect of each donation be deemed to have taken effect –

(a)     in such order as the donor may elect; or

(b)     if the donor fails to make an election within fourteen days after having been called upon by the Commissioner to do so, in such order as the Commissioner may determine.

(4)     The payment of the tax in terms of subsection (1) shall be accompanied by a return.

(5)     The Commissioner may, in accordance with Chapter 8 of the Tax Administration Act, at any time assess either the donor or the donee or both the donor and the donee for the amount of donations tax payable or, where the Commissioner is satisfied that the tax payable under this Part has not been paid in full, for the difference between the amount of the tax payable and the amount paid, but the payment by either of those parties of the amount payable under such assessment shall discharge the joint obligation.

[Sub­section (5) substituted by section 5 of Act 33 of 2019]

59.    Persons liable for the tax

 

The person liable for donations tax shall be the donor: Provided that if the donor fails to pay the tax within the period prescribed in subsection (1) of section 60 the donor and the donee shall be jointly and severally liable for the tax.

58.    Property disposed of under certain transactions deemed to have been disposed of under a donation

 

(1)     Where any property has been disposed of for a consideration which, in the opinion of the Commissioner, is not an adequate consideration that property shall for the purposes of this Part be deemed to have been disposed of under a donation: Provided that in the determination of the value of such property a reduction shall be made of an amount equal to the value of the said consideration.

 

(2)     Where a person disposes of a restricted equity instrument, as defined in section 8C, under the circumstances contemplated in section 8C(5)(a) or (b), that restricted equity instrument shall for the purposes of this Part be deemed to have been donated by that person at the time that it is deemed to vest for the purposes of section 8C and to have a value equal to the fair market value of that instrument at that time: Provided that in the determination of the value of that restricted equity instrument a reduction shall be made of an amount equal to the value of any consideration in respect of that donation.

57.    Disposals by companies under donations at the instance of any person

 

If-

 

(a)       any property is disposed of by any company at the instance of any person; and

 

(b)       that disposal would have been treated as a donation had that disposal been made by that person,

 

that property must for the purposes of this Part be deemed to be disposed of under a donation by that person.

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.