04/09/2026
The increase in the annual donation tax exemption from R100,000 to R150,000, which came into effect on 1 March 2026, effectively increases the amount of an interest-free Section 7C loan that can be supported without donations tax by approximately 50%:
For a married couple where each spouse contributes equally, the loan increases roughly from R2.58m → R3.87m
That's an additional approximately R1.29 million of interest-free trust funding before the annual Section 7C deemed donation exceeds the couple's combined exemptions.
This calculation assumes that each spouse actually makes a loan of their respective share. It is not enough for one spouse to make the entire R3.87m loan and then try to use both exemptions.
If you're considering this for a family trust, the next calculation I would suggest is to compare a R2.58m loan (old limit), R3.6m loan and R3.87m loan over 10 years, showing the cumulative Section 7C deemed donations, donations tax, and the estate-duty saving from keeping the growth in the trust rather than in the individual spouses' estates.
Food for thought.
