Making better choices
is not always this easy


Newsletter Archive

How to Take Advantage of the Donations Tax Allowance

Posted On: Friday, August 4, 2023

How to Take Advantage of the Donations Tax Allowance

“We make a living by what we get, but we make a life by what we give.” (Winston Churchill)

Donations tax 101

Put simply; you can donate an amount of up to R100 000 per year to any third party, like a child or a grandchild, without having to pay donations tax. For example, you could give R30 000 to each of your three grandchildren every year, and R10 000 to your daughter every year, without incurring any tax. If you’re donating to your spouse, there are no limitations – you can donate as much as you’d like, and the donation can take any form: cash, shares, property…

Donations tax for third parties kicks in above R100 000. Any amount above the threshold will be taxed at 20%. This rate applies to amounts up to R30 million; go above that, and you’ll be taxed at 25%. It’s important to know that if you donate investments to your children or grandchildren, the tax on interest, dividends and capital gains is your liability until the child turns 18. 

To pay donations tax, you need to fill in an IT144 form and send it to SARS. It’s important to note that donations tax must be paid by the end of the month following the month in which the donation was made – it’s not part of your normal tax return.

What about the person receiving the donation?

The good news is that if you’ve received a donation or gift, it is 100% tax-free. The only time you’ll be questioned by SARS is if the donor (the person who gave you the donation or gift) doesn’t pay the required donations tax on time. In that case, both donor and donee become equally responsible for the tax payable. You certainly don’t want to pay tax on a gift, so if you’re ever on the receiving end of a monetary amount over R100 000, make sure you raise the important tax consequences with the donor.

And remember even though there’s no tax consequence for you as a beneficiary, you must declare the donation on your Tax Return as an “Amount Considered Non-Taxable”. This is because you have to declare all your income to SARS, even the non-taxable bits.

Use your donations allowance to pay for your grandkids’ education

One way for an older investor to use their donations allowance is to help pay for their grandchildren’s school fees. If you’re in this position, you can make use of further tax breaks by opening tax-free saving accounts earmarked for education. There is no tax on the growth within a tax-free fund and there is no capital gains tax payable when funds are withdrawn to pay for the school fees.

But do take note of the tax-free savings limits: You can only donate a maximum of R36 000 to each account per year, with a lifetime limit of R500 000.

What if you don’t believe in making donations?

Money is inextricably tied to emotion and woven into family dynamics. Maybe you don’t have anyone in your close circle to donate to, or you’d prefer to delay your donation until your passing, as a form of inheritance?

You can still make use of the donations tax allowance and put the R100 000 exemption to good use. The way to do it is to write promissory notes for the beneficiaries, to the combined value of R100 000 per year. These notes need to be registered with SARS by the donor and donee(s). Once you’ve navigated that minor hurdle, the process is relatively simple when you pass away. Provided everything is above board and logged correctly, a significant amount of estate duty will be saved. 

The bottom line

Tax planning and financial planning are closely linked, because taxes are such a large expense item. Nobody wants to pay more tax than they absolutely have to, but you also don’t want to save on tax only to compromise growth in other investments. It’s a fine line!

Please speak to your financial advisor. We will help you create a bespoke plan that suits your lifestyle and your investment goals.

Please Register Below Or Login To Continue Reading.

First Name
Last Name


December 4 - Stock Markets Break Three-Month Losing Streak
December 3 - The Differences Between Life and Living Annuities
December 2 - Should you be an Optimist or a Pessimist With Your Money?
December 1 - How to Give Meaningful Gifts This Festive Season
November 4 - Market Update: The Effects of War, Higher Interest Rates and China on Equities
November 3 - Why do People Invest in Property?
November 2 - Retirement Planning: The ins and Outs of Nominating Beneficiaries
November 1 - Retiring Well is About More Than Money
October 4 - Why Your Marital Contract Really Matters
October 3 - How to Avoid Being Scammed by Email Fraudsters
October 2 - The Stock Market Indices to Watch When Monitoring Equity Performance
October 1 - Why do Some People Have a Problem Spending Money?
September 4 - The Difference Between Being Rich and Being Wealthy
September 3 - The Ins and Outs of Buying Offshore Property
September 2 - A Good Budget Doesn’t Limit Spending, it Prioritises it
September 1 - Should you pay off your home loan?
August 4 - How to Take Advantage of the Donations Tax Allowance
August 3 - Five Reasons why a Financial Windfall Must be Managed Carefully
August 2 - What’s Cooking with the Three-Pot System?
August 1 - Make Sure Your Family is Financially Prepared for When You Pass Away
July 4 - A Must-Have for Couples who Choose not to Tie the Knot
July 3 - Can Gratitude Make you Feel Better About Your Money?
July 2 - Four Ways to Make the Most of Retirement
July 1 - How to Invest When There’s So Much Bad News
June 4 - The Ins and Outs of Compulsory Annuities
June 3 - Who is Influencing Your Financial Decisions?
June 2 - R is for Rebalancing
June 1 - Don’t let Money Ruin Your Relationship
May 4 - Five Ways to Teach Kids About Money
May 3 - Much Ado About Risk
May 2 - Living Wills: A Must Have, Despite the Grey Areas
May 1 - What is True Wealth?
April 4 - How the 2023 Budget Will Impact Your Pocket
April 3 - Three Financial Imperatives for Women in Divorce
April 2 - Should You Ask ChatGPT for Financial Advice?
April 1 - Compound Interest: The Eighth Wonder of the World
March 4 - How a ‘Safe’ Fixed Deposit Might Still be Risky
March 3 - Thinking of moving to Australia? Bear these numbers in mind
March 2 - Avoid These 6 Barriers to Wealth Creation
March 1 - How Good do You Think You Are at Investing?
February 4 - Is Money Stress Taking a Toll on You?
February 3 - Why an Endowment is One of the Best Ways to Invest Offshore
February 2 - Why too Much of a Good Thing Can be a Bad Thing
February 1 - Invest With FIRE and Never Look Back
January 4 - Why Lottery Winners End up Broke: The Importance of Your Financial Context
January 3 - Discover the Freedom of a Tidy Portfolio
January 2 - Why You Absolutely Should be Investing in Education
January 1 - Four Simple Steps to Start the Year on the Right Financial Foot


December 4 - What is This Volatility Risk People are Always Talking About?
December 3 - Why You Need to Watch Out for The Butterfly Effect
December 2 - 6 Ways to Achieve Financial Freedom
December 1 - Three Books for the Holidays
November 4 - The Question of Loyalty
November 3 - Why do we Even Have Bull and Bear Markets?
November 2 - Should I Buy a Holiday House?
November 1 - Put Stocks, Rather Than Socks, Under the Tree This Christmas
October 4 - Can You Take Out Life Insurance on Someone Else?
October 3 - Loss Aversion and Lifestyle Creep – How Behaviour Influences Saving
October 2 - Why Timing Might be Everything in Retirement – Especially in a Bear Market
October 1 - Get Rich - Stay Rich Eight Mistakes Wealthy People Never Make
September 4 - Capital Gains Tax: 10 Common Questions Answered
September 3 - The Risk That Many Investors Don’t Think About
September 2 - Much Ado About Regulation 28 and the Private Investor
September 1 - The “Two Bucket” Retirement Savings System: What is it and Why is it Important?
August 4 - Retirement Planning for Age-Gap Couples
August 3 - A Simple “50-15-5” Budget Hack for Women (and Men!)
August 2 - Does Your Family Need a Constitution?
August 1 - Women’s Month: Three Ways You Can Improve Your Money Health
July 4 - Five Things to Check When a Loved One Passes Away
July 3 - Rules of Financial Planning For a Special-Needs Child
July 2 - Why Your Financial Plan Should Cater For Possible Dementia
July 1 - Why Inflation is the Most Important Investment Benchmark
June 4 - How Relevant Is The 4% Rule of Thumb These Days?
June 3 - Why You Should Treat Your Finances Like Your Health
June 2 - Is Your Business Good Retirement Capital?
June 1 - With the Limits Raised, How Much Should You Invest Offshore?
May 5 - Quote of the Month: Challenging the Rejection of an Insurance Claim
May 4 - Financial Products: The Less You Understand, the More You Pay
May 3 - The Miracle of Investment Debit Orders
May 2 - Five Things to Think About as Interest Rates Rise
May 1 - Stay Calm When the Bear Prowls
April 5 - Quotes of the Month – The War in Ukraine
April 4 - Smart Ways to Give: During and After Your Lifetime
April 3 - Take These Three Steps to Break the Money Shame Spiral
April 2 - When Things Don’t Go According To (The Financial) Plan
April 1 - What Amazon and Ford Can Tell Us About Diversification
March 4 - Quotes of the month – What the NFT?
March 3 - How to Avoid Losing Your Life’s Savings to a “Tinder Swindler”
March 2 - The Different Ways to Invest: What Does It All Mean?
March 1 - Three Reasons You Shouldn’t Wait to Talk to Your Kids About Money
February 6 - Quote of the Month – Don’t Cash In Your Retirement Savings
February 5 - Should You Top Up Your Retirement Annuities Now?
February 4 - Don’t Let Delays in the Master’s Office Leave Your Family in Financial Distress
February 3 - Don’t Let Delays in the Master’s Office Leave Your Family in Financial Distress
February 2 - Three Reasons an Insurer Could Cancel Your Policy
February 1 - Investing: Men and Women See Things Differently
January 4 - Quote of the month – Stay invested!
January 3 - What SARS Says About Crypto Assets and Tax
January 2 - Three Ways to Leave a Legacy, And Not Just an Estate
January 1 - Red-Carding the Myth of The Rational Investor