Tax Exempt Institutions Connect Issue 1 (September 2022)

The Tax Exempt Institutions (TEI) Segment

The Tax Exempt Institutions (TEI) Segment is responsible for overseeing the exempt institutions sector. Our vision is:

To ensure that tax exempt institutions are categorised in clearly defined sub-segments, are aware of their tax obligations (providing clarity and certainty) and are offered modern and differentiated services (making it easy to comply), based on their segmented needs, as a means to drive voluntary compliance and reduce the cost and burden of compliance.

The role of TEI includes:

  • Developing insights and understanding of segments to recognise their unique needs (incl. tax contribution)
  • Identifying risks specific to the segments
  • Developing engagement models to best achieve voluntary compliance based on insights
  • Acting as a segment owner and ambassador for the segments internally and externally.

The TEI Segment will  develop segment specific engagement, communication and education that will support increased compliance within the segment. In addition to this, TEI works closely with other SARS segments to deliver on:

  • Tax product/ system changes/improvements
  • Service channels changes/improvements
  • Legislation or tax regime change proposals
  • Tax register improvements
  • Revenue insights and enhancements

To engage the TEI Segment, please feel free to send an e-mail to [email protected]

IT3(d) Project

On 10 May 2022, SARS engaged identified stakeholders to participate in the IT3(d) project. This project aims to automate the submission of Section 18A tax deductible donations receipts and information to SARS as part of SARS’ third-party data providers. Furthermore, it is in support of SARS’ strategic objectives to make it easy and simple for taxpayers to comply, as well as and working with and through stakeholders to improve the tax ecosystem. More sessions will be held with the identified stakeholders as the project unfolds.

One of the success stories shared during the IT3(d) project engagement was that of the provision of Section 18A data to SARS by the Solidarity Relief Fund during the 2020/2021 Filing Season. To read more on the Solidarity Relief Fund and Section 18A, please click on these links:

FATF Recommendation 8

The Financial Action Task Force (FATF) is the global money laundering and terrorist financing watchdog. The inter-governmental body sets international standards that aim to prevent these illegal activities and the harm they cause to society. As a policy-making body, the FATF works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.

With more than 200 countries and jurisdictions committed to implementing these regulatory reforms, FATF has developed a set of recommendations or standards that ensure a co-ordinated global response to prevent organised crime, corruption, and terrorism. They help authorities to seize money that is amassed from illicit dealings in illegal drugs, human trafficking, and other crimes. FATF also works to stop the funding of weapons of mass destruction.

Furthermore, the FATF reviews money laundering and terrorist financing techniques and continuously strengthens its standards to address new risks, such as the regulation of virtual assets, which have spread widely as cryptocurrencies gain popularity.  The FATF monitors countries to ensure they implement the FATF Standards fully and effectively, while holding countries that do not comply to account.

The FATF Recommendation 8 focuses on the Non-Profit organisation (NPO) sector, and the potential use of the NPOs as vehicles for Money Laundering (ML) and Terrorism Financing (TF).

“Countries should review the adequacy of laws and regulations that relate to Non-Profit 0rganisations which the country has identified as being vulnerable to terrorist financing abuse. Countries should apply focused and proportionate measures, in line with the risk-based approach, to such non-profit organisations to protect them from terrorist financing abuse, including:

(a) by terrorist organisations posing as legitimate entities;

(b) by exploiting legitimate entities as conduits for terrorist financing, including for the

purpose of escaping asset-freezing measures; and

(c) by concealing or obscuring the clandestine diversion of funds intended for legitimate purposes to terrorist organisations.”

To read more on all the FATF Recommendations click here


Did You Know:

Public Schools

Although public schools are exempt from Income Tax, in terms  of section 10(1)(cA)(i) of the Act, they are still liable for the submission of annual income tax returns.

Public schools can be approved under the group registration in which the Provincial Department of Education will ensure that it includes all the financial information of the schools that falls under the province.

Public schools may also apply individually for approval in which case, the school will be liable for the submission of its annual income tax returns.

In addition, public schools are also exempt from Skills Development Levy (SDL). To read more on public schools and tax, please click here.

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