Can I Give Money to My Children?
Can I Give Money to My Children Without Paying Donations Tax?
If you’ve ever wanted to help your children financially—perhaps with university fees, living expenses, or a deposit for their first home—you may have wondered whether SARS will treat that generous act as a taxable donation. Similarly, if you’re helping your ageing parents make ends meet every month, you may ask: Is this considered a donation for tax purposes? In South Africa, the law does provide room for financial support of family members, but there are clear rules around what counts as a donation and when donations tax becomes payable.
Under South African tax law, donations tax is governed by Sections 54 to 64 of the Income Tax Act 58 of 1962. Section 55 defines a “donation” as any gratuitous disposal of property, including the gratuitous waiver or renunciation of any right. In simpler terms, if you give someone property or money without expecting anything in return, it may be regarded as a donation—even if that someone is your child or parent.
Donations tax is imposed on the person making the donation—the donor—and not the person receiving the gift. The rate is currently 20% on the value of the donation, up to R30 million in total donations. Any donations that exceed this threshold are taxed at 25%. The tax must be paid by the end of the month following the month in which the donation was made. For example, if you made a donation in May, the tax would be due by the end of June. You are required to submit a return (SARS Form IT144) and make payment directly to SARS.
However, the law also recognises that not all financial support given to others should be taxed. There are several important exemptions to donations tax.
Perhaps the most well-known exemption is the annual R100,000 allowance granted to natural persons under section 56(2)(a) of the Income Tax Act. This means that every individual may donate up to R100,000 in total per tax year without triggering any donations tax. If you give more than that amount during the year, donations tax is payable on the excess.
Another important exemption applies to donations between spouses. Donations made between spouses who are legally married or in a recognised civil union are entirely exempt from donations tax, regardless of the value of the gift.
But what about family support? This is where section 56(2)(c) of the Act becomes important. It provides that any “bona fide contribution towards the maintenance of any person” is exempt from donations tax, provided the contribution is reasonable in relation to the needs of the person being supported and the means of the person providing the support.
When it comes to supporting minor children, the position is fairly straightforward. Parents are both legally and morally responsible for maintaining their children. As a result, amounts paid to cover schooling, food, clothing, housing and other essential needs are not considered taxable donations. These are routine maintenance obligations, and SARS will not expect you to pay donations tax on them.
The situation becomes a little more complex when adult children are involved. If your adult child is still financially dependent—perhaps because they are studying full-time, unemployed, or struggling to make ends meet—then support payments may still be classified as bona fide maintenance, provided they are reasonable. For example, monthly payments to help your child cover rent, groceries, or transport while they are unemployed would likely qualify as exempt maintenance. However, if you were to give your adult child a large, once-off amount—say, R300,000 to buy a car or put down a deposit on a home—SARS may consider that to be a donation rather than maintenance. If that amount exceeds your R100,000 annual exemption, donations tax would be payable on the excess.
Similarly, supporting your parents financially can fall under the maintenance exemption if it meets certain conditions. While you are not legally obliged to support your parents in the same way you are required to support your children, regular and necessary contributions—such as covering rent, medical bills or groceries—may still be exempt from donations tax if they qualify as bona fide maintenance. Again, the key is reasonableness. A monthly payment of R10,000 to help your parents survive might be seen as legitimate support. But a once-off transfer of R1 million to buy your mother a new home would likely be treated as a taxable donation.
Ultimately, SARS is concerned not just with the fact that money has changed hands, but with the nature, purpose, and value of that transfer. If your payments are regular, essential, and modest, and they are intended to support a dependent family member, they are far less likely to attract donations tax. However, if they are large, irregular, or clearly intended as gifts of capital rather than contributions toward living expenses, then donations tax may very well apply.
So, can you give money to your children without paying donations tax? Yes, absolutely—within limits. The law allows for tax-free giving up to R100,000 per year and exempts reasonable support provided to dependants. However, anything over and above these thresholds needs to be carefully considered. A well-intentioned act of generosity could trigger an unexpected tax bill if not structured properly.
If you’re planning to make large gifts or provide ongoing financial support to loved ones, it’s always wise to consult a tax advisor. With the right guidance, you can structure your giving in a way that meets your goals while staying compliant with SARS regulations.
Disclaimer: This article is intended for general informational purposes only and does not constitute tax or legal advice. Please consult with a qualified tax practitioner for advice specific to your situation.
