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Tax Exempt Institutions

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Tax Exempt Institutions Segment

This is a segment of taxpayers that require the Commissioner’s approval for exemption from income tax and other related benefits. These institutions are mainly in the non-profit sector, but also include Recreational Clubs, Membership Associations, Small Business Funding Entities, Home Owners Associations, Government Institutions and Private Companies owned by Government Institutions. 

Each category of exemption is considered according to specific legislative provisions as contained in the Income Tax Act (ITA). Click on the categories below to learn more about the type of exemption and related information. 

Type of Exempt Entities and / or Categories

Sections of the Income Tax Act (ITA)

Public Benefit Organisations:

All Public Benefit Organisations (PBO’s) engaged in public benefit activities (PBAs) and includes institutions such as religious institutions, day care centres, disaster relief organisations, and, health clinics, etc.

Section 10(1)(cN) read with Section 30

9th Schedule of the ITA (PBAs)

Section 18A (Tax deductible donations)

Recreational Clubs:

Clubs are formed for the mutual benefit of members who contribute to share the cost of providing a collective benefit, namely, the social or recreational facility, e.g. running clubs, angling clubs, bowling clubs etc.

 

Section 10(1)(cO) read with Section 30A

Membership Associations:

Fidelity or Indemnity Fund,

Trade Union (registered with Department of Labour),

Chamber of Commerce, or Industries (or an Association of such Chambers),

Mutual Loan Association,

Local Publicity Association.

Section 10(1)(d)(iii) read with Section 30B

Professional Bodies:

Company, society, or other association of persons established to promote the common interest of persons, carrying on any particular kind of business, profession, or occupation.

Section 10(1)(d)(iv)(bb) read with Section 30B

Small Business Funding Entity:

An entity established for the sole purpose of providing funding to small, micro, and medium enterprises (SMMEs).

Section 10(1)(cQ) read with Section 30C

Home Owners Associations:

Association of persons formed for managing the collective interests common to all its members in respect of expenditure applicable to the common immovable property

Section 10(1)(e)(i)(cc)

Public Institutions:

Institution, Board, or Body established in terms of South African legislation and partially or fully funded through public resources.

This excludes National, Provincial and Local Government.

Section 10(1)(cA)(i)

Companies owned by Public Institutions

Any South African company of which all the shares are held by a body exempt in terms of section  10(1)(cA)(i) – i.e. wholly-owned by one or more Government Institutions.

Section 10(1)(cA)(ii)

Tax deductible donations (Section 18A):

Qualifying entities, that have been approved as PBOs, may obtain additional approval to issue tax deductible donations to donors.

Section 18A status falls in two broad categories, namely a “doer” and a “conduit”. If the PBO conducts the qualifying activities, it is a “doer” OR provides funds or assets (excl. services and other resources) to other S18A approved entities it is a “conduit”.

In addition to PBOs, the following institutions may also apply for approval to issue S18A receipts, and if approved, these entities will also be required to meet the Commissioner’s reporting requirements.

·         Government Departments

·         Specialised Agencies

Section 18A

Section 18A(1)(a)

Section 18A (1)(b)

Part II of the Ninth Schedule

 

 

 


Section 18A(1)(c)

Section 18A(1)(bA)

A branch of a foreign tax-exempt organisation:

The branch of a foreign tax-exempt organisation may be recognised as such if proof is provided that it is registered as a tax exempt organisation in its home country

 

 

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