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Can the R100 000 donations exemption apply to a trust?

Friday, 29 May 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: We are currently updating a trust’s books from 2012. We would like to use the R100 000 donation exemption.

  • How do I capture it in the Trust’s books?
  • Does it have to flow in cash or can we write a journal?
  • Can we go back to 2012? Was the rate the same?

A: Note that the exemption that you refer to is available to individuals only.  It is therefore not available to the trust.  From the information provided it appears that the donations may in actual fact not have been made to the trust.  If this assumption is wrong and the individual in actual fact made a donation to the trust, you will have to obtain detail of the other taxable donations made by the individual during the relevant year of assessment.   

In terms of section 56(2) it is the first R100 000 of the sum of the values of all property disposed of under donation by a donor (person) who is a natural person in respect of which donations tax is not payable. 

The R100 000 (in section 56(2)(b)) has not been amended since 2008.  

It is unclear how you want to use the R100 000 donation exemption.  In our view it would be beyond tax avoidance to retrospectively create donations to the trust.  It is also unclear if the donors in the current instance declared the donations on the IT144 form.  

In most instances donations to a trust are by their nature capital receipts and should be reflected as trust capital.  

Disclaimer: Nothing in this query and answer should be construed as constituting tax advice or a tax opinion. An expert should be consulted for advice based on the facts and circumstances of each transaction/case. Even though great care has been taken to ensure the accuracy of the answer, SAIT do not accept any responsibility for consequences of decisions taken based on this query and answer. It remains your own responsibility to consult the relevant primary resources when taking a decision.



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