I would like to find out if an international gifting circle is legal. I would be giving a gift to someone in the circle ($500) to join, I would then invite in two people to join, who would also give gifts. The payment can be made using the PayPal gifting option. The process moves in a circular fashion and when I move into the middle, I would receive 8 x the value of the gift ($4000). All gifts are given freely.

I would like to know: 1. Is it legal. 2. What the tax implications are of receiving $4000 (approximately R65k) a month as international gifts paid to me.

Hi there and thank you for your question,

I am a practicing attorney based in South Africa and I will assist you with your question. Please feel free to ask as many follow up questions in order to clarify your question. If you have a new question, you must please open a new thread.

What you are explaining is a Pyramid Scheme - which is, unfortunately, illegal and criminal in nature. Anyone who sets one up or who participates could be criminally charged.

Regarding the second part of your question, you would be taxed on the money at 42% because it is most certainly not a donation that you've received -- you've worked for the money! You've spent time, energy and effort in setting up this structure to actively earn you money. 

I highly suggest that you do not get involved. 

If there is a part of the answer which you need more advice on, or clarity please continue in this same thread instead of opening a new question.

Att. Patrick

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