Donations in kind : an investigation of the value for purposes of section 18A of the Income Tax Act
Date
2019-07-29
Authors
Journal Title
Journal ISSN
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Publisher
AOSIS
Abstract
Orientation: The tax deductibility of donations in kind in terms of the Income Tax Act No. 58 of
1962 in South Africa.
Research purpose: The aim of this article is to critically analyse the provisions of section 18A(2)
(a)(v) of the Income Tax Act No. 58 of 1962 to determine the value, if any, to be indicated on a
section 18A receipt. It is also investigated whether the donee or donor is responsible for
determining the fair market value, if such value should be included on a section 18A receipt.
Motivation for the study: Addressing uncertainty regarding which amount, if any, should be
included on a section 18A receipt for tax purposes in respect of a donation in kind.
Research design, approach and method: This article involves a non-empirical interpretative
analysis of tax legislation and other literature. The mode of inquiry for the article is qualitative
in nature and follows a doctrinal method, which is closely associated with tax research.
Main findings: This article highlights the possible ambiguity in the interpretation of section
18A(2)(a)(v) of the Income Tax Act No. 58 of 1962 and that the term ‘nature’ could be construed
as including a value.
Practical/managerial implications: The donor would have certain tax implications preceding
a section 18A deduction which would require the donor to determine the fair market value and
could enable the donor to also indicate such fair market value in respect of a donation in kind
to the donee.
Contribution/value-add: This article contributes to literature by highlighting the uncertainty
in respect of the interpretation of tax legislation relating to section 18A.
Description
CITATION: Nel, R. & Klopper, N. 2019. Donations in kind : an investigation of the value for purposes of section 18A of the Income Tax Act. Journal of Economic and Financial Sciences, 12(1):a418, doi:10.4102/jef.v12i1.418.
The original publication is available at https://jefjournal.org.za
The original publication is available at https://jefjournal.org.za
Keywords
Endowments -- Taxation -- South Africa, South Africa -- Income Tax Act 58 of 1962, Property -- Taxation -- South Africa