Automatic Income Tax Exemptions

The Income Tax Act allows for automatic income tax exemptions of certain entities that do not require additional approval from SARS in so far as Income Tax registration. These exemptions are set out in the Income Tax legislation in detail. Examples of automatic exemption can be seen below. A few of these entities may qualify to issue tax deductible receipts under section 18A (e.g. government and specialised UN agencies) and will be required to submit an application to SARS. These entities will also be required to meet the Commissioner’s reporting requirements.
Type of Exempt Entities and / or Categories Section of the Income Tax Act (ITA)
Government Spheres (national, provincial, and local), e.g. National and provincial departments, municipalities. S10(1)(a)
Foreign government and foreign government institutions: UN Specialised Agencies S10(1)(bA)
Multi-national Banks as defined in the applicable section S10(1)(bB)
All funds defined in section 1 of the Pension Funds Act; Pension Funds, Pension Preservation Funds, Provident Fund, Provident Preservation Funds, Retirement Annuity Funds, Beneficiary Funds. Benefit Funds defined in section 1(1) of the Income Tax Act: Friendly societies and Medical Aid Schemes S10(1)(d)(i)-(ii)
Any registered Body Corporate and Share Block Company in relation to the levies received or accrued: This exemption is applicable to the levies income and other receipts and accruals to the extent that they do not exceed R50,000 per annum, and is automatically available upon selection of the relevant entity type (e.g. Body Corporate or Share Block Company) on submission of an annual ITR14 return. Only entities duly registered under the Sectional Title Schemes Management Act and the Share Blocks Control Act may make this election in their annual returns. * Partial taxation rules apply  S10(1)(e)(i)(aa)-(bb)
The entities listed under Section 10(1)(t):   CSIR, SAIDC, SANRAL, ARMSCOR (incl. wholly owned subsidiaries), traditional councils, water service providers, DBSA, compensation funds, reserve funds, licenced mutual associations, NHFC   S10(1)(t)
Political Parties   All political parties registered with the Independent Electoral Commission in terms of section 15 of the Electoral Commission Act, 1996 (Act No. 51 of 1996).   S10(1)(cE)

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