What if a section 18A donation exceeds the limit?

Direct answer

The part of a qualifying section 18A donation that is disallowed only because it exceeds the annual limit is generally carried forward. It is treated as a donation in the next year of assessment and can continue rolling forward, but the 10% limitation applies again each year.

The normal limit is 10% of taxable income calculated before the section 18A deduction and certain foreign tax credits. A valid section 18A receipt is essential.

What this means in practice

An excess deduction is deferred, not automatically lost. However, it must be tracked accurately. Do not claim the same receipt in full again next year. Record the current-year amount allowed, the balance carried forward and any new qualifying donations separately.

The donor must also confirm that the organisation or government department was approved to issue section 18A receipts for the activity funded.

Step-by-step

1. Collect every section 18A receipt for the year.
2. Verify the issuer, receipt details and donation amount.
3. Calculate the 10% limit using the correct taxable-income base.
4. Claim the permitted amount in the income-tax return.
5. Reconcile SARS's assessment with your calculation.
6. Carry the disallowed balance into the next year's supporting schedule.

Documents and records to keep

• Original section 18A receipts.
• Proof of payment or asset transfer.
• Annual taxable-income calculation.
• A year-by-year excess-donation roll-forward.
• ITR12 or ITR14 and notices of assessment.

Important limits and exceptions

A donation is not deductible merely because it went to a worthy cause. The recipient and activity must qualify, and the prescribed receipt must contain the required information. Donations in kind may require additional valuation evidence.

When to get tailored advice

Get advice for a large donation, a donation of property or shares, a corporate donation, or where SARS does not reflect the expected carry-forward.

Related TaxProof guides

• Can a company deduct a section 18A donation?
• What tax applies to a family donation?

Sources

• SARS, Taxation in South Africa
• SARS, Section 18A guide