Tax Exempt Institutions

What’s New

South African government and private sector partners published a report on the terrorist financing risk assessment on the non-profit organisation (NPO) sector that will result in focused, proportionate, and risk-based measures to mitigate the identified risks.

The report is being launched today, 18 April and tomorrow, 19 April.

The sector risk assessment is in line with the Financial Action Task Force (FATF) global standards to combat money laundering and terrorist financing, as well as South Africa’s follow-up action plan to address grey listing by the FATF in 2023. The FATF is an intergovernmental body which sets global standards and measures for combating money laundering and terrorist financing. As a member of the FATF, South Africa is obliged to meet these standards.  Read the full media statement.

  • 9 April 2024 – Tax Exempt Institutions Connect fourth edition 

  • 4 April 2023 – Third Party Data Annual Submission

    A reminder that the SARS Third Party Data Annual Submissions opened on 1 April 2024 and will close on 31 May 2024*. Third parties must submit accurate and complete data for the entire period of 1 March 2023 – 29 February 2024.

    See the IT3(d) BRS and submission dates table on the Third Party Data platform webpage.

    Third Parties (banks, medical schemes, fund administrators, section 18A approved institutions among others.) must, by law, send data to SARS via a return. They must include information such as:

    • savings account interest,
    • medical scheme contributions,
    • withholding tax on interest,
    • dividends tax,
    • medical scheme contributions, and insurance payments,
    • IT3 data submissions: IT3(b), IT3(c), IT3(d), IT3(e), IT3(s) and, *IT3(t).

     * The closing date for IT3(t) submissions is 30 September 2024.

    Third Party data providers can submit data to SARS using these three electronic options:

    1. eFiling (via a data submission form with a limited volume)
    2. Connect: Direct® (Unlimited)
    3. Secured File Gateway [HTTPS] (for files smaller than 10MB)

    To ensure a successful submission to use and activate these channels, you must be registered with eFiling.

  • 1 March 2023 – Further information required in terms of section 18A(2)(a)(vii) of the Income Tax Act

    The following further information must be included on a receipt issued in terms of section18A(2)(a) of the Income Tax Act:

    • Donor nature of person (natural person, company, trust, etc.);
    • Donor identification type and country of issue (in case of a natural person);
    • Identification or registration number of the donor;
    • Income tax reference number of the donor (if available);
    • Contact number of the donor;
    • Electronic mail address of the donor;
    • A unique receipt number; and
    • Trading name of the donor (if different from the registered name).

Notice 3082 was published in the Government Gazette 48104 on 24 February 2022.

  • 9 February 2023 – Business Requirement Specification for the implementation of the Submission of Section 18A receipts issued (IT3(d) project)

     

    The IT3(d) Business Requirement Specification (BRS) document has been published which sets out the manner in which S18A third party information should be submitted to SARS and in preparation for the early adopters phase in April 2023.

    Please feel free to send queries and comments regarding the BRS and implementation of the IT3(d) to [email protected].

  • 24 January 2023 – Tax Exempt Institutions Connect second edition

  • 18 November 2022 – Draft Public Notice: Listing further information that must be included on a receipt issued in terms of section 18A(2)(a) of the Act

    The South African Revenue Service has issued the draft public notice on the additional information to be included in the Section 18A receipts issued by approved entities. The Explanatory Note can be accessed here for more information. Please note that comments on the public notice closes on 05 December 2022, and that comments should be submitted to Adele Collins at [email protected].

  • 30 September 2022 – Tax Exempt Institutions Connect first edition

    The Tax Exempt Institutions (TEI) Segment has published the first EI Connect, which deals with insights, topics, and themes relevant to the Income Tax Exempt sector of taxpayers. The TEI Segment will publish the EI Connect on a quarterly basis and will have various snippets of information on the tax obligations and rights of the Income Tax Exempt sector of taxpayers, which will be featured under the “Did you Know” section. Each “Did You know” will deal with a different topic, and will provide insights and answers to some of the frequently asked questions received from taxpayers. This issue deals with the tax rights and obligations of Public Schools as tax exempt institutions (EIs). Should you want a specific topic to be discussed in the “Did You Know” section, please e-mail the [email protected]

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. Each category of exemption is considered according to specific legislative provisions as contained in the Income Tax Act (ITA). These institutions include

For more information on automatic exempt categories, please click here. 

Definitions

Non-profit organisations play a significant role in society as they assist with the social and development needs of the country.  Preferential tax treatment is designed to assist Not for profit organisations by augmenting their financial resources.  

The preferential tax treatment for Not for Profit organisations is not automatic and organisations that meet the requirements set out in the Income Tax Act must apply for this exemption. 

An organisation will only enjoy preferential tax treatment after it has applied for and been granted approval as a Tax Exempt Institution by SARS. If the application has been approved by SARS, the organisation will be registered with SARS as a Tax Exempt Institution, issued with an approval letter that confirms the type of exemption status, and allocated a unique exemption reference number in addition to their tax reference number.

NOTE: An organisation that has registered as a Non-Profit Organisation (NPO) (with DSD – NPO Directorate) or as a Non-Profit Company (NPC) (with CIPC) does not automatically qualify for preferential tax treatment and needs to apply for exemption with SARS.

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