Monthly Archives: March 2016

SANBS Blood Drive

Thank you to the following for saving a life Leonie van Niekerk, Alicia Loots, Martin van Schalkwyk, Anette van Heerden, Luzanne Harmse, Joelene van der Westhuizen, Sarena Goosen, Anze Pienaar, Icy Jooste.

1st Years 2016

We would like to welcome our AWESOME first year clerks for 2016 to the Newtons family.

Back: Corne Groenewald, Liandri Willers, Jason van Tonder, Danie Saayman, De-Jay Ferris, Danette Bloem, Martin van Schalkwyk Front: Izel van Aswegan, Melanie van der Merwe, Anette van Heerden, Liezl Ackerman

Donations Tax

Donations tax is levied in terms of section 54 of the Income Tax Act, 58 of 1962 (‘Income Tax Act’). The rate of tax is currently at 20%, and is levied on the value of any property donated by South African tax residents. The tax is levied on the donor, although the Income Tax Act does make provision for the tax to also be recovered from the person receiving the donation in certain instances if the donor fails to pay the requisite amount of tax.

It is no coincidence that the tax is levied at exactly the same rate as Estate Duty is. It therefore acts as an effective anti-avoidance measure for Estate Duty to ensure that an estate is not reduced by way of donations by a person in anticipation of death and in order to escape the Estate Duty.

A donation could either arise by virtue of a gratuitous disposal of property, or where property has been disposed of for less than adequate consideration. It should be noted that a donation is defined in the Income Tax Act as to specifically include any ‘gratuitous waiver or renunciation of a right’. This implies that the donations tax also potentially comes into play where a loan is waived.

Several exemptions from the tax apply though. These general exemptions include:

  • Donations between spouses;
  • Awards given to employees;
  • Donations to public benefit organisations;
  • Distributions by a trust to its beneficiaries; and
  • Donations between a ‘group of companies’.

In addition to the above, any bona fide contribution to the maintenance of any person considered to be reasonable by the Commissioner will not attract donations tax. Similarly, a natural person is allowed to annually donate property to the value of R100,000 donations tax free, whilst companies are permitted donations in the form of so-called ‘casual gifts’ of up to R10,000 during a tax year without incurring a liability towards donations tax.

Donations tax is also levied on more than only donations as such. The tax is also levied on property which has been disposed of in exchange for less than what the Commissioner would consider to be adequate consideration. These ‘part donations’ would therefore also attract donations tax. For example, if a person were to sell an asset worth R1 million for R500,000, that sale would potentially attract donations tax. The donations tax would however only be levied on so much as is the difference between what would be considered to have been adequate consideration and the amount paid for the asset disposed of (in the above example, donations tax of R100,000 would thus arise). The donations tax would not apply though where an asset is disposed of at a discount which has been granted for commercial considerations.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE).

SARS Retention Periods: Are you keeping your tax-related records long enough?

How long must I keep my tax records? When can I throw old tax-related documents away? What happens if SARS request supporting documents and I don’t have it anymore? Specific tax laws lay down certain obligations regarding the retention periods of tax-related documentation. This article discusses tax retention periods as set out in the Tax Administration Act (TAA).

Who should keep tax records?

The following persons must keep tax records:

  • Anyone who submitted a tax return;
  • l Someone who should have submitted a tax return but didn’t;
  • l Any person who was not required to submit a tax return because they earned exempted income or taxable income which was below a tax threshold.

How long must records be kept?

A taxpayer who submitted a tax return must keep the relevant records for five years after the return’s submission date.

When a person should have submitted a tax return but didn’t, they must keep tax records until the return is submitted. After the return has been submitted, the records should be kept for five years from the submission date.

If a person was not required to submit a tax return because they earned income which was either exempted or below a tax threshold, such a person must keep their tax records for five years after the last day of the relevant tax period.

Where a person is either aware or has been notified that their tax records will be audited or investigated, such records must be kept for the longest of the following periods:

  • Five years from the return’s submission date if a return was submitted;
  • Five years from the end of the tax period if the taxpayer was not required to submit a return; or

l Until the audit or investigation has been finalized.

When a taxpayer lodged an objection or appeal against the assessment of a tax return or a decision made by SARS in terms of the TAA, the relevant records must be kept for the longest of the following periods:

  • Five years from the return’s submission date if a return was submitted;
  • Five years from the end of the tax period if the taxpayer was not required to submit a return; or
  • Until the assessment or decision has been finalized.

In what format must records be kept?

Tax records must be kept either in their original form, a form authorized by a senior SARS official for a specific taxpayer upon request from the taxpayer, or the form prescribed by the Commissioner in a public notice.

What happens if records are not kept?

In terms of the TAA, if a taxpayer fails or neglects to keep the required tax records, they have committed a criminal offence and could also be liable for an administrative non-compliance penalty.

SARS inspections

Taxpayers are obliged by law to keep tax records in South Africa available for inspection by SARS. SARS may make unannounced inspections of tax records to determine whether the necessary records have been kept for the specified retention periods. Records must be kept in a safe place, in an orderly way and be open for inspection, audit or investigation by SARS.

This article discussed general retention periods of records as set out in the TAA. The specific tax records to be kept to satisfy SARS requirements are specified in the different tax acts, e.g. the Income Tax Act or the VAT Act. For more information about which specific records must be kept, please consult the relevant acts or your tax practitioner.

Reference List:

Accessed on 23 August 2015:

  • SAICA Guide on the Retention of Records (Updated October 2013)

Accessed on 2 September 2015:

  • SARS Short Guide to the Tax Administration Act, 2011 (Act No. 28 of 2011) – SARS Version 2

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE).