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Donations Tax - Coggle Diagram

- - - - Sale between two participants price
    - - 70% of MV (reduced by 30%)
- - - - (joint estate)spouses liable for Dt at 50% of the value of property in JE
      - (not joint estate) the spouse who owns the property will pay full DT
- - - - Annuity
      - usufructory interest.
  - - - Step1.
        
        Annual value of the annuity (x 12 mths)
      - step 2
        
        Lower of:
        
        Period of annuity
        
        Donor's remaining LE
        
        Donee's remaining LE
      - step 3
        
        Annual value x PV from table based on lowest of step 2 table A or B
      - Life expectancy tables
        
        Consider age at next birthday (i.e I am currently 23 yrs old so my next birthday age is 24 >> use my LE at age 24)
        
        Table A
        
        Life expectancy
        
        Present value factor of R1 @ 12%
        
        Table B
        
        Fixed number of years not age
        
        ignore fractions
        
        use for an annuity
    - - usufruct (use of fruits)
        
        right of use
        
        right to income derived
        
        cannot dispose property
        
        but can rent it out
      - bare dominium = ownership
        
        if bare dominium dies >> transfer ownership according to WILL
      - Usufructory
        
        holder of usufruct
        
        can transfer usufruct to bare dominium
      - A. valuation of USUFRUCT
        
        step 1.
        
        FV of property X 12%
        
        Step 2
        
        Lower of
        
        period of usufruct (table B)
        
        usufructory LE (table A)
        
        Donor's LE (table A)
        
        Step 3
        
        Annual value x present value
      - B. Value of BARE DOMINIMUM
        
        Step 1
        
        FV of Property X 12%
        
        Step 2
        
        Period of usufruct (table B)
        
        Usufructory's LE (Table B)
        
        Step 3
        
        Annual equivalent X Present value discount
        
        Step 4
        
        Fair MV LESS Present value amount = Value of Bare dominium
      - C. Other Valuation Rules
        
        Donor and Donee not NP >>> use 50 years (table B)
        
        Usufruct is books, pictures, art >> Annual value = receipts from enjoyment
        
        SARS can change MV and the 12% yield
- - - - TP not natural persons
        
        10 000 per anum (apportioned)
        
        Specifically for casual gifts
      - Natural persons
        
        100k per tax payer
        
        Between 1 March - 28/29 Feb
    - - Exemption applied in order of dates donation made
      - if donations made same date TP must choose order > failure to choose SARS will choose
  - - - Direct donations to trust - spouse beneficiary (vested right in property donated)
    - - donation to a trust where spouse is a beneficiary (vested right)
      - spouse donating is also a beneficiary of trust where the donee is a beneficiary NO EXEMPTION (Spouse will pay DT)
    - - donation in fear(contemplation of death)
        
        donation takes effect after the person dies - no DT on that property
        
        if donation is revoked before the donor dies > subject to estate duty when they die and not DT
    - - Donor donates assets ito will (strictly upon death, no fear of death)
      - Donor will pay estate duty and not DT
    - - Donations taxed already paid and will be refunded ...therefore no DT
    - - Government, PBO's & Political parties
      - Recreational clubs (running clubs)
      - Small business funding entities
      - Retirement & benefit funds
      - Voluntary awards
    - - If donor or founder donates to trust no exemption unless beneficiary is a spouse (apply spouse exemption)
- - - - Discourage avoidance
        
        estate duty
        
        tax on value of property when someone dies
        
        normal tax
- - - - Are there exemptions applicable?
        
        No
        
        a) Determine the value of the property
        
        b) Deduct the general exemption
        
        c) DT @ 20% or 25%
        
        Yes
        
        No donations tax
    - - No donations tax