Government (Public) Institutions

Section 10(1)(cA)(i) of the Income Tax Act, 1962 ( the Act) provides an exemption from normal tax of –

• receipts and accruals of any institution, board , or body (other than a company as defined in the Companies Act, any co-operative, closed corporation, trust, water service provider);
• established by or under any law and which, in the furtherance of its sole or principal object-
  • conducts scientific, technical or industrial research;
  • provides necessary or useful commodities, amenities or services to the State ( includes any provincial administration) , or members of the general public; or
  • carries on activities ( including the rendering of financial assistance by way of loans or otherwise) designated to promote commerce, industry or agriculture or any branch

Public institutions which are established in terms of South African legislation and partially or fully funded through public resources.

These include:

• Public institutions per the PFMA
• Public FET Colleges as defined in the Further Education and Training Colleges Act
• Universities as defined in the Higher Education Act;
• Public Hospitals or Public Health Care Establishments as defined in the National Health Act
• Public Schools as defined in Chapter 3 of the South African Schools Act
• Public Museums as defined in the Cultural Institutions Act
• Public Pension Funds created as per the Pension Funds Act

Any department of government approved by the Commissioner for purposes of Section 18A may issue a Section 18A receipt for any donation only to the extent that it will be used solely in carrying on any PBAs in Part II.

Helpful Resources:

EI1 – Application for Exemption from Income Tax – External Form

Guide for Public Institutions

Statutory bodies and VAT

Statutory bodies (government institutions) are not included in the VAT. They are regarded as public authority under the VAT Act.  This means that they don’t register and file VAT 201 returns. For the purposes of VAT, a public authority means:

• any department or division of the public service as listed in Schedule 1,2 or 3 of the Public Service Act,1994 ( Act No, 103 of 1994);
• any public entity listed in Part A or C of the Schedule to the Public Finance Management Act, 1999 ( Act No 1 of 1999), or
• any other public entity designated by the Minister for the purposes of this Act to be a public authority