Linkedin
Facebook
Email
more
The provisions of Section 7C of the Income Tax Act, identifying instances of deemed donations, have now been effective for a number of years. Over that time, SARS has extended the scope of the provisions to counter different measures being adopted by certain taxpayers to escape their exposures.
For taxpayers that are in a position whereby they are deemed to have made a donation under the provisions of Section 7C, they should note that the deadline for payment of any donations tax falls on 31 March 2021. This would relate to deemed donations for the year of assessment ended 28 February 2021.
Failure to make payment of the donations tax by the due date will result in interest being incurred on the late payment of the tax.
There is however a small reprieve to taxpayers when considering their deemed donations this year. Due to the general drop in interest rates that have occurred over the past year, the official rate of interest that is used when determining the value of the deemed donations, has also reduced significantly since the prior year. By comparison, the official rate of interest in February 2020 was 7.25%, and is currently sitting at only 4.5%.
Taxpayers are advised to address any of their Section 7C deemed donation exposures before the deadline, and to contact a Tax Practitioner if they require any further assistance.
Read more detailed information on the continuing crackdown on loan funding to trusts here
Neil Hughes
Director: Tax, Johannesburg