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54.Levy of donations tax.—Subject to the provisions of section56, there shall be paid for the benefit of the National Revenue Fund a tax (in this Act referred to as donations tax) on the value of any property disposed of (whether directly or indirectly and whether in trust or not) under any donation by any resident (in this Part referred to as the donor).
[S. 54 amended by s.37 of Act No. 85 of 1974 and by s. 20 of Act No. 103 of 1976 and substituted by s.24 of Act No. 90 of 1988 and by s.40 of Act No.59 of 2000.]
55.Definitions for purposes of this Part.—(1)In this Part, unless the context otherwise indicates—
“cumulative taxable value”......
[Definition of “cumulative taxable value” deleted by s.25(a) of Act No. 90 of 1988.]
“donation” means any gratuitous disposal of property including any gratuitous waiver or renunciation of a right;
“donee” means any beneficiary under a donation and includes, where property has been disposed of under a donation to any trustee to be administered by him for the benefit of any beneficiary, such trustee: Provided that any donations tax paid or payable by any trustee in his capacity as such may, notwithstanding anything to the contrary contained in the trust deed concerned, be recovered by him from the assets of the trust;
“fair market value”, means—
(a)
the price which could be obtained upon a sale of the property between a willing buyer and a willing seller dealing at arm’s length in an open market; or
(b)
in relation to immovable property on which a bona fide farming undertaking is being carried on in the Republic, the amount determined by reducing the price which could be obtained upon a sale of the property between a willing buyer and a willing seller dealing at arm’s length in an open market by 30 per cent;
[Definition of “fair market value” amended by s.25(b) of Act No. 90 of 1988 and substituted by s.6(1)(a) of Act No. 32 of 2005 with effect from the date of promulgation of that Act, 1 February, 2006 and applicable in respect of any donation which takes effect on or after that date.]
“property” means any right in or to property movable or immovable, corporeal or incorporeal, wheresoever situated.
(2)......
[Sub-s.(2) amended by s.22 of Act No. 28 of 1997 and by s.37 of Act No. 30 of 2000 and deleted by s.6(1)(b) of Act No. 32 of 2005 with effect from the date of promulgation of that Act, 1 February, 2006 and applicable in respect of any donation which takes effect on or after that date.]
(3)For the purposes of this Part a donation shall be deemed to take effect upon the date upon which all the legal formalities for a valid donation have been complied with.
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);
[Para. (a) amended by s. 18 (a) of Act No. 90 of 1964 and substituted by s. 18 (1) of Act No. 96 of 1985.]
(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;
[Para. (b) amended by s. 18 (b) of Act No. 90 of 1964.]
(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);
[Para. (f) deleted by s. 32 (1) (a) of Act No. 113 of 1993 and inserted by s.38(1)(a) of Act No. 8 of 2007 deemed to have come into operation on 7February, 2007 and applicable in respect of any donation made on or after that date.]
(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
[Sub-para. (i) amended by s. 38 (a) of Act No. 85 of 1974 and substituted by s.41 of Act No.59 of 2000.]
(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
[Sub-para. (ii) substituted by s. 21 of Act No. 113 of 1977.]
(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
(iv)
......
[Sub-para.(iv) deleted by s.45(1)(a) of Act No. 31 of 2005 deemed to have come into operation on 8November, 2005 and applicable in respect of any donation which takes effect on or after that date.]
(v)
......
[Para. (g) substituted by s. 18 (c) of Act No. 90 of 1964. Sub-para.(v) deleted by s.45(1)(a) of Act No. 31 of 2005 deemed to have come into operation on 8November, 2005 and applicable in respect of any donation which takes effect on or after that date.]
(gA)
......
[Para. (gA) inserted by s. 33 of Act No. 89 of 1969 and deleted by s.26(a) of Act No. 90 of 1988.]
(h)
by or to any person (including any government) referred to in section 10(1)(a), (b), (cA), (cE), (cN), (cO), (d) or (e);
[Para. (h) substituted by s.38(b) of Act No. 85 of 1974, by s.23(a) of Act No.96 of 1981, by s.21 of Act No.85 of 1987, by s.28 of Act No.141 of 1992, by s.32(1)(b) of Act No.113 of 1993, by s.38(1)(a) of Act No.30 of 2000 and by s.38(1)(b) of Act No. 8 of 2007 deemed to have come into operation on 1April, 2007 and applicable in respect of any donation made on or after that date.]
(i)
......
[Para. (i) amended by s.26(b) of Act No. 90 of 1988 (English only) and deleted by s.38(1)(b) of Act No.30 of 2000 with effect from 15July, 2001 and applicable in respect of any donation made on or after that date.]
(j)
......
[Para. (j) amended by s.26(c) of Act No. 90 of 1988 (English only) and deleted by s.38(1)(b) of Act No.30 of 2000 with effect from 15July, 2001 and applicable in respect of any donation made on or after that date.]
(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;
[Para. (k) substituted by s. 28 of Act No. 121 of 1984 and by s.45(1)(b) of Act No. 31 of 2005 deemed to have come into operation on 26October, 2004.]
(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;
[Para. (n) added by s. 25 (1) of Act No. 55 of 1966.]
(o)
where such property consists of the full ownership in immovable property, if—
(i)
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
(ii)
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;
[Para. (o) added by s. 38 (c) of Act No. 85 of 1974, deleted by s. 4 (1) of Act No. 30 of 1984 and added by s.39(1) of Act No.30 of 1998 deemed to have come into operation on 27April, 1994 and applicable in respect of any donation made on or after that date.]
(p)
......
[Para. (p) added by s. 31(1) (a) of Act No. 94 of 1983 and deleted by s.18(1)(a) of Act No.36 of 1996.]
(q)
......
[Para. (q) added by s.45(1) of Act No.60 of 2001 and deleted by s.35(a) of Act No.74 of 2002.]
(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.
[Para. (r) added by s.35(b) of Act No.74 of 2002 and substituted by s.56(1) of Act No.45 of 2003 and by s.38(1) of Act No.32 of 2004 with effect from the date of promulgation of that Act, 24January, 2005 and applicable in respect of any donation which takes effect on or after that date.]
(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 R10000: 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 R10000 the same ratio as that year of assessment bears to twelve months;
[Para. (a) substituted by s. 23 (b) of Act No. 96 of 1981, amended by s. 31 (1) (b) of Act No. 94 of 1983, substituted by s.26(d) of Act No. 90 of 1988 and amended by s.24(1)(a) of Act No.30 of 2002.]
(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 R100000;
[Para. (b) amended by s. 13 (1) of Act No. 101 of 1978 and by s. 31 (1) (c) of Act No.94 of 1983, substituted by s.26(d) of Act No. 90 of 1988 and by s.18(1)(b) of Act No.36 of 1996 and amended by s.24(1)(b) of Act No.30 of 2002, by s.27(1) of Act No.9 of 2006, by s.2(2)(b) of Act No.8 of 2007 deemed to have come into operation on 1 March, 2007 and applicable in respect of any year of assessment commencing on or after that date.]
(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.
57.Donations by a body corporate at the instance of any person.—(1)If any property is disposed of under any donation by any body corporate at the instance of any person, that property shall for the purposes of this Part be deemed to be disposed of under a donation by that person: Provided that any tax paid or payable by that person in respect of any property so disposed of under a donation by any body corporate may be recovered from the assets of that body corporate.
(2)For the purposes of subsection (1) property shall be deemed to be disposed of under a donation by any body corporate at the instance of any person if, having regard to the circumstances under which that donation was made by such body corporate, the Commissioner is of the opinion—
(a)
that it was not made in the ordinary course of the normal income earning operations of that body corporate; and
(b)
that the selection of the donee who benefited by the donation was made at the instance of that person.
[S. 57 amended by s. 22 of Act No. 88 of 1965 and by s. 27 of Act No. 90 of 1988 and substituted by s. 26 of Act No. 21 of 1995.]
57A.Donations by spouses married in community of property.—For the purposes of this Part, in the case of spouses married in community of property, where any property is disposed of in terms of a donation by one of the spouses and—
(a)
such property falls within the joint estate of the spouses, such donation shall be deemed to have been made in equal shares by each spouse; and
(b)
such property was excluded from the joint estate of the spouses, such donation shall be deemed to have been made solely by the spouse making the donation.
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.
[Sub-s.(1) (previously s.58) renumbered by s.39(a) of Act No.32 of 2004.]
(2)Where a person disposes of a restricted equity instrument, as defined in section8C, under the circumstances contemplated in section8C(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 section8C 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.