Deductible donations in the determination of taxable income

DONATIONS by their nature are not incurred for the purposes of trade, neither are they incurred in the production of income, hence, they are not allowed as a deduction for tax purposes. However, the law provides for the deduction of certain donations under prescribed conditions.

Section 15(2) (r) to 15(2) (r5) of the Income Tax Act [Chapter 23:06] stipulates the circumstances in which donations are allowed and the maximum amounts that can be deducted as detailed below: Donations to: 1. The National Scholarship Fund, The National Bursary Fund, a charitable Trust administered by the Minister responsible for Social Welfare or the Minister responsible for Health are allowed as a deduction and there is no limit to the amount.

2. Fund any one of the following provided it is approved by the Minister responsible for Health.

i. Purchase of medical equipment for a hospital operated by the State, Local Authority or religious organisation.

ii. Construction, maintenance or extension of a hospital operated by the State, Local Authority or religious organisation.

iii. Procurement of drugs to be used by a hospital operated by the State, Local Authority or religious organisation.

The maximum allowed as a deduction is US$100 000.

3. A research institution approved by the Minister responsible for Higher and Tertiary Education.

The maximum allowed as a deduction is US$100 000.

4. To fund any one of the following provided is approved by the Minister responsible for Education:

i. Purchase of educational equipment for a school operated by the State, Local Authority or religious organisation

ii. Construction, maintenance or extension of a school operated by the State, Local Authority or religious organisation

iii. Procurement of books and other educational materials to be used in a school operated by the State, Local authority or religious organisation.

The maximum allowed as a deduction is US$100 000.

5. The Public Private Partnership Fund and the maximum allowed as a deduction is US$50 000.

6. The Destitute Homeless Persons Rehabilitation Fund (Fund established under the Ministry of Finance) and the maximum allowed as a deduction is US$50 000.

NB: It is important for our valued clients to note that the burden of proof as to whether a donation has been approved or not rest with the taxpayer.

Clients who made wrong treatment of donations or have made other errors or omissions in their tax declarations are advised to make voluntary disclosure at their nearest ZIMRA Office and have penalty waived in full.

Disclaimer This article was compiled by the Zimbabwe Revenue Authority for information purposes only. ZIMRA shall not accept responsibility for loss or damage arising from use of material in this article and no liability will attach to the Zimbabwe Revenue Authority. To contact ZIMRA: WhatsApp line : +263 782 729 862 Visit our website : www. zimra.co.zw Follow us on Twitter : @Zimra_11 Like us on Facebook : www.facebook.com/ZIMRA.11 Send us an e-mail : pr@zimra.co.zw/webmaster@zimra. co.zw Call us (Head Office) : 04 –758891/5; 790813; 790814; 781345; 751624; 752731 e-TIP : <http://ecustoms.zimra.co.zw/etip/>