– Donations tax (on gifts to non-18A recipients)

  – What it is: A tax you pay when you give money or assets to someone who isn’t an approved 18A recipient.

  – How it works with your estate: Money or assets you give away during your life reduce what you own at death. This can lower estate duty when you die, because part of your estate has already gone to others.

  – Rate and rules: 20% tax is applied to donations above R100 000 in any given tax year. Donations between spouses are exempt.

– Section 18A donations to approved PBOs

  – What it is: Donations to approved public benefit organizations. You get a tax deduction (not a tax credit) from your income tax.

  – How it affects your estate: These gifts do not reduce your estate value for estate duty. They’re an income tax benefit, not an estate planning benefit.

  – Rate and rules: It reduces your taxable income (up to a limit, usually around 10% of taxable income, with carry-forward rules possible if you donate more). No donations tax for the donor on these gifts.

Bottom line

– If your goal is to reduce estate duty and the estate’s value, use donations tax-supported gifts to non-18A recipients or otherwise structure lifetime gifts. If your goal is a tax deduction for charitable giving, use 18A gifts to approved PBOs.