South Africa’s donations tax applies when a person gives away property or assets without receiving equivalent value in return.
For the 2026/27 tax year, individuals can donate up to R150,000 per year under the annual exemption, while taxable amounts above applicable exemptions are generally subject to donations tax at 20% or 25%.
Key Takeaways
- Several exemptions may apply, including for certain donations between spouses, to qualifying organizations, or for reasonable maintenance.
- Taxable donations are generally taxed at 20% up to R30 million and 25% on the excess.
- The donor is generally responsible for paying donations tax in South Africa.
- Receiving a genuine gift does not by itself create an income tax liability for the recipient.
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The information in this article is not tax advice and may have changed since the time of writing.
What is donation tax in South Africa?
Donations tax is a tax imposed on the gratuitous disposal of property by a South African resident.
In practical terms, a donation occurs when someone gives away property or gives up a right without receiving something in return.
The definition is broader than simply handing someone cash. It can include the transfer of assets, property or rights for no consideration or for less than their true value.
Donations tax is separate from ordinary income tax.
Receiving a genuine gift does not automatically mean that the recipient has taxable income.
Instead, the main tax consideration is generally the donations tax liability of the person making the gift.
For South African residents, donations tax can become relevant when transferring significant wealth to children, relatives, trusts or other individuals.
How much donation is taxable in South Africa?
For an individual, donations tax generally applies to the portion of qualifying donations that exceeds the R150,000 annual exemption in the 2026/27 tax year, after any other applicable exemptions are taken into account.
The R150,000 exemption applies to the individual's total qualifying donations during the tax year, rather than to each separate gift.
It is an annual exemption, so it becomes available again in the following tax year.
For example:
- R100,000 donated: The full amount falls within the R150,000 annual exemption, so no amount is potentially taxable under this exemption.
- R150,000 donated: The full amount is covered by the annual exemption.
- R250,000 donated: R150,000 is covered by the exemption, leaving R100,000 potentially taxable.
- R500,000 donated: R150,000 is covered by the exemption, leaving R350,000 potentially taxable.
The amount remaining after the annual exemption is not necessarily the final taxable amount, because specific exemptions may apply to certain donations.
These include qualifying donations between spouses, donations to certain government bodies and organizations, and bona fide maintenance contributions.
For taxpayers that are not natural persons, such as companies and trusts, a different exemption applies.
In 2026/27, qualifying casual gifts of up to R20,000 per year of assessment are exempt.
What is the new donations tax threshold in South Africa for 2026?
For the 2026/27 tax year, South Africa increased the annual donations tax exemption from R100,000 to R150,000 for individuals and from R10,000 to R20,000 for companies, trusts and other non-natural persons.
The R50,000 increase for individuals is the first adjustment to the individual exemption since 2007, while the increase for non-natural persons is the first since 2002.
The donations tax rates have not changed. Taxable donations are still subject to 20% up to the R30 million cumulative threshold and 25% on amounts above R30 million.
|
Threshold |
2026/27 treatment |
|
Annual individual exemption |
R150,000 |
|
Annual exemption for non-natural persons |
R20,000 |
|
Cumulative donations tax threshold |
R30 million |
|
Rate up to R30 million |
20% |
|
Rate above R30 million |
25% |
What donations tax exemptions apply in South Africa?
South Africa donations tax exemptions include the R150,000 annual exemption for individuals, qualifying donations between spouses, certain donations to government and public benefit organizations, and reasonable bona fide maintenance contributions.
- Annual exemption for individuals. A natural person can make qualifying donations of up to R150,000 per tax year without donations tax in 2026/27.
- Donations between spouses. Certain donations between spouses are exempt from donations tax.
- Donations to government and qualifying organizations. Donations to certain government bodies, approved public benefit organizations and other qualifying tax-exempt institutions can be exempt from donations tax when the relevant requirements are met.
- This exemption is separate from whether the donor can claim an income tax deduction, which requires the donation to meet the applicable section 18A conditions.
- Bona fide maintenance contributions. A genuine contribution towards another person's maintenance can qualify for an exemption where the amount is considered reasonable by the Commissioner.
- This can be particularly relevant when a parent provides financial support to a child.
These exemptions mean that the amount of a donation alone does not determine whether donations tax is payable; the nature of the donation and the circumstances of the transfer must also be considered.
How is donation tax calculated in South Africa?
South African donations tax is calculated by subtracting applicable exemptions from the value of the donation, then applying a 20% or 25% tax rate to the taxable amount.
The basic calculation
Value of donation − applicable exemptions = taxable donation
The 20% rate applies to cumulative taxable donations up to R30 million, counting donations made from 1 March 2018 after exemptions. The portion above that threshold is taxed at 25%.
Worked example: R500,000 donation
A South African tax resident donates R500,000 in the 2026/27 tax year. The full R150,000 annual exemption is available, no other exemption applies, and the taxable donation falls entirely within the 20% band.
1. Subtract the annual exemption
R500,000 − R150,000 = R350,000
2. Apply the donations tax rate
R350,000 × 20% = R70,000
Donations tax payable
R70,000
Who pays for donation tax in South Africa?
The donor, meaning the person making the donation, is generally liable for donations tax.
If the donor fails to pay the tax within the prescribed period, the donor and recipient can become jointly and severally liable for the outstanding amount.
SARS can assess either or both parties in circumstances where the required donations tax has not been paid.
Donations tax generally needs to be paid by the end of the month following the month in which the donation takes effect, unless SARS allows a longer period.
A donations tax declaration, Form IT144, must also be completed and submitted with the required supporting information.
Do non-residents pay donations tax in South Africa?
Non-residents are generally not liable for South African donations tax because donations tax applies to South African residents.
However, they may still have South African tax obligations on South African-source income, such as income from property or business activities in the country.
The applicable tax treatment can also be affected by exemptions and the terms of a relevant double tax agreement.
Are charitable donations tax deductible in South Africa?
A charitable donation can potentially qualify for an income tax deduction, but this is separate from the donations tax exemption.
SARS allows qualifying taxpayers to deduct certain bona fide donations made to approved organizations under section 18A, provided the relevant requirements are met.
The donation generally needs to be supported by the required section 18A receipt, and the deduction is subject to statutory limits.
Not every organization that describes itself as a charity automatically qualifies.
The organization must have the relevant approval, and the donation must meet the requirements for the deduction.
SARS notes that section 18A approval is restricted to specific approved organizations and activities.
It is therefore useful to distinguish between:
- Donations tax: a tax potentially imposed on the person making a donation.
- Income tax deduction: a potential deduction available to a taxpayer making a qualifying charitable donation.
- PBO status: an organization’s tax-exempt status, which does not automatically mean every donation to it qualifies for an income tax deduction.
Conclusion
Donations tax becomes particularly relevant when family wealth moves beyond ordinary financial support and into substantial transfers of cash, investment options, property or other assets.
The tax cost should be considered before a gift is made, rather than after the transfer has already taken place.
For families transferring significant wealth, the timing, type of asset and structure of the gift can materially affect the overall tax outcome.
A transfer that appears straightforward can also have consequences under other parts of the South African tax system, particularly where appreciating assets or larger estates are involved.
For this reason, larger family gifts are best considered as part of the donor’s wider estate and wealth transfer strategy, rather than as an isolated donations tax transaction.
FAQs
Is there a difference between a gift and a donation?
For South African donations tax purposes, a gift and a donation are generally treated similarly when property is given away for free without expecting anything in return.
A transfer for inadequate consideration can also be treated as a donation for donations tax purposes, even if the recipient pays something in return.
How much money can you receive as a gift without being taxed in South Africa?
There is no general tax-free limit on money received as a genuine gift; the R150,000 annual exemption generally applies to the donor's donations tax liability, not the recipient.
How to avoid donation tax between parent and child in South Africa?
A parent can use the R150,000 annual exemption for individuals in 2026/27, while reasonable bona fide maintenance contributions may qualify for a separate exemption.
What is the best way to gift money to my children?
For a straightforward cash gift, using the annual donations tax exemption can be an efficient way to transfer money without donations tax on the exempt amount.
For larger gifts, consider spreading qualifying transfers across tax years or checking whether another exemption, such as a bona fide maintenance contribution, applies before making the transfer.
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