ALL FAQs

What is a public benefit organisation (PBO)?
A PBO is an organisation that meets the requirements prescribed in section 30 of the Income Tax Act (the IT Act) and which may apply for approval to the Commissioner of the South African Revenue Service (the Commissioner

What type of organisation can apply for approval as a PBO?
The concept PBO is defined in the IT Act and means any organisation which is: A non-profit company (NPC) as defined in section 1 of the Companies Act, 2008(previously associations not for gain incorporated under section 21 of the Companies Act, 1973).

What are the requirements to qualify for PBO approval?
The qualifying requirements for PBO approval are: The organisation must be established in the Republic as either a NPC, trust, an association of persons or branch of a foreign exempt organisation.

How does SARS confirm PBO approval?
The notification of approval as a PBO is issued by the Tax Exemption Unit (TEU) by way of a letter, which contains a unique reference number allocated to the organisation.

Does a registered non-profit organisation (NPO) or a NPC automatically qualify for PBO approval?
No, a NPO registered under the Nonprofit Organisations Act, 1997 with the Department of Social Development or a NPC as defined in section 1 of the Companies Act 2008, do not automatically qualify for PBO approval.

What is a public benefit activity (PBA)?
A PBA is an activity determined by the Minister of Finance as being of a benevolent nature having regard to the needs, interests and well-being of the general public

What are the requirements and conditions that the founding document of an organisation must comply with?
The requirements are set out in section 30(3)(b) of the IT Act, and are summarised as follows: At least 3 persons who are not connected persons must accept fiduciary responsibility for the organisation.

Who must sign the written undertaking?
The written undertaking must be given by the person responsible in a fiduciary capacity for the funds and assets of the organisation, and any other two of the unconnected persons.

May an application for PBO approval be submitted without annual financial statements?
Yes, but only if an organisation has been established or formed during the financial year in which application for PBO approval is sought and where the annual financial statements have not yet been finalised.

What are the requirements that must be complied with by an approved PBO?
The founding document must be amended, within a period of 12 months (or any other period prescribed) from the date of the letter issued by the TEU confirming PBO approval, or whenever any other amendment is effected to the founding document.

Must PBO’s submit a tax return as an exempt organisation?
Yes All PBOs must submit annual Income Tax returns on an IT12EI, despite the exemption.

Why must an approved PBO submit an income tax return (IT12EI) if there is no tax liability?
The income tax return enables the Commissioner to assess whether the organisation approved as a PBO is operating within the prescribed limits of the relevant approval granted

What information must be contained in an Income Tax Return (IT12EI)?
An organisation’s tax return (IT12EI) cannot be accepted if: This has been completed on the wrong tax return (for example an IT44).

How do I submit the IT12EI return?
You can submit your return via: eFiling (to make your submission electronically, register on www.sarsefiling.co.za); Any SARS branch; Post to the TEU or a SARS branch.

What records is an approved PBO required to keep?
Any books of accounts, records or other documents, including financial statements, of any approved PBO must be retained and preserved for a period of at least 4 years after the last date of an entry in any book or,

Is a public benefit organisation exempt from all taxes?
No, only from Income Tax. The PBO exemption is only in respect of Income Tax in terms of section 10(1) of the Income Tax Act and may include other taxes and duties, which will be contained in the approval letter.

Must an approved PBO submit provisional tax returns?
An approved PBO is not required to make provisional tax payments or submit provisional tax returns.

What does it mean when an organisation is approved by SARS for section 18A purposes?
An organisation approved by the Commissioner under section 18A of the IT Act may issue tax deductible receipts to taxpayers in respect of any bona fide donation made in cash or of property made in kind.

What is a tax deductible receipt?
This is a specific receipt that is issued to a donor by an organisation that has been approved by the Commissioner under section 18A of the IT Act.

May the donations received for which a tax deductible receipt has been issued be used for any purpose?
The donations received in cash or of property made in kind may only be used to carry on PBAs listed in Part II of the Ninth Schedule of the IT Act.

Does SARS have a template / form it makes available for tax deductible receipts to PBOs approved for section 18A purposes?
No, each organisation approved by the Commissioner for section 18A purposes may design their own unique tax deductible receipt. Legislation does require what information and details must appear on the tax deductible receipt.

What details must be put on the section 18A receipt?
A taxpayer will only be allowed to claim a deduction for a donation to a section 18A approved organisation if it is supported by a receipt issued by the organisation.

What is a bona fide donation?
A bona fide donation is a voluntary, gratuitous gift disposed of by the donor out of liberality or generosity, where the donee is enriched and the donor impoverished.

What does not constitute a bona fide donation for purposes of section 18A?
The following examples do not constitute a bona fide donation: The donation of services rendered such as a professional person providing a voluntary service or renders his skill free of charge.

What activities qualify for section 18A approval?
PBAs approved by Minister of Finance for section 18A purposes are listed in Part II (of the Ninth Schedule to the IT Act.

What are the requirements to qualify for section 18A approval?
To qualify for section 18A approval the organisation must - be approved as a PBO under section 30 of the IT Act; carry on one or more approved PBAs in Part II of the Ninth Schedule to the IT Act;

May tax deductible receipts be issued retroactively?
No, the IT Act does not allow for section 18A to be approved retroactively. Receipts for tax deductible donations may only be issued in respect of bona fide donations received on or after the date of the

What are the consequences of issuing tax deductible receipts without obtaining section 18A approval from SARS?
A tax deductible receipt issued by an organisation which has not been approved by the Commissioner for section 18A purposes will not be allowed as a deduction from taxable income of the donor.

What are the consequences when an organisation that has been approved for section 18A purposes abuses this approval?
A person who is in a fiduciary capacity responsible for the management and control of the income or assets of a PBO which has been approved for section 18A

What is the difference between approval under section 18A(1)(a) and 18A(1)(b)?
Section 18A(1)(b) of the IT Act is a separate provision for conduit or funding PBOs that provide funds or assets to organisations that carry on Part II approved PBAs

Is a funding PBO approved under section 18A(1)(b) of the IT Act restricted to whom it may provide funds or assets?
Yes, a conduit or funding PBO that has been approved under section 18A(1)(b) may not provide funds or assets to another conduit or funder that has been approved under section 18A(1)(b), but only to a doer that carries on PBAs in Part II of the Ninth

Does the 75% distribution requirement apply to all organisations approved for purposes of section 18A?
No, this requirement is only applicable to conduit or funding PBOs approved under section18A(1)(b) of the IT Act. An approved conduit or funding PBO is required within 12 months

Is it possible not to comply with the 75% distribution obligation?
Yes, only if the approval of the Commissioner has been obtained. The Commissioner taking into account the public interest and the purpose for which the relevant organisation wishes to accumulate the funds may

How does an organisation apply for section 18A approval?
A formal application must be submitted for consideration. An application formEI 1, which is available on the SARS website,must be completed. The organisation must provide motivated reasons based on legal

What requirements must be complied with after obtaining section 18A approval?
An organisation approved by the Commissioner for purposes of section 18A of the IT Act is required to: Only issue tax deductible receipts in the year the donation is received.

What is the Tax Exemption Unit (TEU) and what are their contact details?
The TEU is a division within SARS which has special responsibility for matters relating to exemption from Income Tax in respect of certain organisations.

May an application for PBO approval be submitted without annual financial statements?
Yes, but only if an organisation has been established or formed during the financial year in which application for PBO approval is sought and where the annual financial statements have not yet been finalised.

Can a section 18A tax deductible receipt be issued without SARS approval?
No, only organisations that have been approved under section 18A of the IT Act by the Commissioner may issue tax deductible receipts to taxpayers in respect of bona fide donations made in cash or in property of kind.

Which return must be issued for Exempt Institutions?
An IT12EI income tax return must be issued for Exempt Institutions.

What are the channels to obtain an IT12EI return?
You can obtain your IT12EI return via one of the following channels:-eFiling if you are a registered eFiler :-Phone the SARS Contact Centre on 0800 00 7277;

What are the channels to submit my IT12EI return?
You can submit your IT12EI return via one of the following channels:- eFiling if you are a registered eFiler:-The drop boxes at the SARS branches where the completed return can

When must the IT12EI returns be submitted to SARS?
For companies, the return must be completed and submitted within 12 months after the financial year end of the exempt organisation :-For trusts or other entities, the return must be

Where can I find information to help me complete the IT12EI return correctly?
To assist with the completion of the IT12EI return, you can refer to the Quick Guide – How to complete return on income: Exempt Institutions

​Who can I contact if I require assistance in completing the IT12EI return?
If assistance is required in completing the IT12EI return, the Tax Exemption Unit can be contact via:- Email: teu@sars.gov.za :-Telephone: (012) 483 1700

Which return must be issued for Exempt Institutions?
An IT12EI income tax return must be issued for Exempt Institutions.

What are the channels to obtain an IT12EI return?
You can obtain your IT12EI return via one of the following channels :- eFiling if you are a registered eFiler :-Phone the SARS Contact Centre on 0800 00 7277;

What are the channels to submit my IT12EI return?
You can submit your IT12EI return via one of the following channels :- eFiling if you are a registered eFiler. :- The drop boxes at the SARS branches where the

When must the IT12EI returns be submitted to SARS?
For companies, the return must be completed and submitted within 12 months after the financial year end of the exempt organisation. :-For trusts or other entities,

​Where can I find information to help me complete the IT12EI return correctly?
To assist with the completion of the IT12EI return, you can refer to the Quick Guide – How to complete return on income: Exempt

Who can I contact if I require assistance in completing the IT12EI return?
If assistance is required in completing the IT12EI return, the Tax Exemption Unit can be contact via:- Email: teu@sars.gov.za :-Telephone: (012) 483 1700

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