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Tax Deductability of Donations

Donations made to approved Section 18A PBOs may be deducted from the taxable income of the donating taxpayer. Previously thisbenefit was limited to donations made to secondary and tertiary educational institutions.

A taxpayer making a bona fide donation in cash or in kind to a Section 18A approved PBO is entitled to a deduction from his taxable income if the donation:is supported by the necessary receipt issued by the PBO; and does not exceed the greater of: five percent of the taxable income of the taxpayer, calculated before allowing any deduction under Section 18A or any deduction for medical and dental expenses; or R1,000.

A taxpayer will only be allowed to claim a deduction for a donation to a Section 18A approved organisation if it is supported by a receipt issued by the organisation.

A taxpayer may claim a deduction for donations in kind made to a section 18A approved PBO. The amount of the deduction to be allowed in these circumstances will be, where the property:

forms part of the trading stock of the taxpayer, including livestock or fresh produce of farmers, the market value of the trading stock;

is an asset used in his trade, the cost to the taxpayer less any allowance (other than an investment allowance) deducted from the income of the taxpayer for that asset;

is not trading stock or a business asset, the cost to the taxpayer less any reasonable depreciation in the case of deterioration of movable property;

is purchased, manufactured, erected, assembled, installed or constructed, the cost to the taxpayer.

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