Donations tax when a company gives money away
When a South African company's donations attract donations tax, its small casual-gift exemption, and when a section 18A receipt makes a gift deductible.
By Achekam · · 4 min read · For Running a business businesses in South Africa
Companies give. A building firm sponsors the local school's sports day, a retailer donates stock after a flood, a professional practice supports a bursary fund, an owner-managed business makes a year-end gift to a charity the directors care about. The giving is generous; the tax treatment is less obvious.
Two different questions get mixed up. The first is whether the company owes donations tax on what it gives away. The second is whether the company can deduct the donation from its taxable income. The answers depend on different rules, and a donation can fall on the wrong side of both. This guide takes them one at a time.
Donations tax rates
SARS's page on other taxes says donations tax is levied at 20% on the cumulative value of property donated since 1 March 2018 up to R30 million, and at 25% on the cumulative value above R30 million. Those are the rates published in February 2026, at the time of writing. SARS's Other Taxes page carries the current donations tax rates and exemption limits, and is the place to check them before a large donation.
"Property" is wide. Cash is the obvious case, but stock given away, equipment handed over and other assets count too. "Cumulative" means the threshold between the two rates is measured across donations since 2018, not one donation at a time.
The casual-gift exemption for companies
Individuals and companies are treated differently. SARS says the first R150 000 of property donated each tax year by a natural person is exempt from donations tax. A taxpayer that is not a natural person, which includes a company, is limited to exempt casual gifts of no more than R20 000 in total per tax year.
That is a much smaller allowance, and it is a total, not a per-donation limit. A company that makes several modest gifts during the year can pass R20 000 without any single gift looking significant. Keep a running total through the tax year.
Above that allowance, do not assume either way. Whether a particular donation attracts donations tax, or falls within some other exemption, depends on who receives it and on what terms. That is a question for your tax adviser before the money leaves, while the terms of the gift can still be shaped.
A worked example in words: a company gives a few thousand rand to a school fundraiser in March, sponsors a sports day in June and donates surplus stock to a shelter in October. None of the three looks large. Added together they may pass the company's casual-gift allowance for the year, and the October donation is then the one that needs a closer look.
Deductions need a section 18A receipt
The second question is the deduction. SARS says only organisations granted section 18A approval by its Tax Exempt Institutions unit may issue tax-deductible donation receipts, and only for donations used for approved public benefit activities.
So a donation is deductible only if the recipient holds section 18A approval and the donation goes to an approved activity, and the company holds the receipt to prove it. A donation to a worthy cause without that approval may be entirely genuine and still not deductible. Before giving, ask the organisation to confirm its section 18A status, and ask for the receipt as a condition of the gift.
What the receipt must show from 2026/2027
The receipt itself has become more demanding. SARS says Public Notice 6762 of 24 October 2025, effective from 1 March 2026, the start of the 2026/2027 tax year, requires additional mandatory information on section 18A receipts, such as the donor's income tax reference number and details of donations of property in kind.
For a company donor, two practical steps follow. Give the recipient the company's income tax reference number when you donate, so it can appear on the receipt. And for donations of stock or equipment, expect the receipt to describe the property given, so keep your own record of what was handed over and its value. The full list of receipt requirements is in section 18A receipt requirements.
Recording donations and keeping the receipts
Donations are easier to manage when they are visible in the books. In Achekam, a business can post manual journals: use a dedicated donations account so every gift, in cash or in kind, sits in one place and the year's running total is a ledger query rather than a hunt through bank statements. An unbalanced journal, or one dated in a closed month, is refused, and a posted journal is corrected only by a reversal, so the record of what was given stays intact.
The receipts belong with the entries. Achekam's Document Centre is a folder-based store where a business uploads files or whole folders, then previews, downloads, renames, moves, tags, archives and searches them, and a new version keeps the earlier ones. A folder per tax year for section 18A receipts and donation correspondence means the evidence is ready when the tax return is prepared.
Before the company gives
- Check the running total of the company's donations for the tax year against the R20 000 casual-gift limit.
- Ask your adviser whether any other exemption from donations tax applies to this recipient.
- Confirm the recipient holds section 18A approval if you want a deduction.
- Give the recipient the company's income tax reference number.
- Record the donation in the donations account, with a description of any property in kind.
- Obtain and file the section 18A receipt.
A company's generosity should not leave a tax bill behind it. Checking the recipient and the running total before each gift is usually all it takes.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
