Tax Exempt Institutions

What’s New

• 10 December 2025 – Tax Exempt Institutions Connect Issue 10 (December 2025)

SARS is introducing an online registration system for Income Tax Exempt Institutions (TEI). This digital system aligns with SARS’s strategic objective to simplify taxpayer compliance through digital platforms. The pilot will commence on 8 December 2025 until 26 February 2026, and will include the migration and data take-on of all existing records and pilot trade testing. The approach will ensure an improved taxpayer experience once the full system is launched on 27 February 2026. To read more about this and other TEI news, see our latest newsletter here.

• 8 December 2025 – Exempt Institutions is going digital

  SARS is introducing an online registration system for Income Tax Exempt Institutions. This digital system aligns with SARS’s strategic objective to simplify taxpayer compliance through digital platforms.

  The pilot will commence on 8 December 2025 until 26 February 2026, and will include the migration and data take-on of all existing records and pilot trade testing. The approach will ensure an improved taxpayer experience once the full system is launched on 27 February 2026.

  What to Expect During Transition Phase

  • Existing Applications: SARS will ensure that all existing applications submitted prior to the 12 December 2025 switch-over period will be finalised in accordance with existing turnaround times.

  • Discontinuation of Manual Applications: SARS will discontinue the manual application submission process (EI1 form) effective 12 December 2025.

  • New Applications: SARS will accept new applications via its new online registration and application platform from 27 February 2026.
    
    
  • Preparation Period: Entities intending to apply for Income Tax exemption must:
    • Register for Income Tax (if the entity does not yet have an Income Tax number)
    • Register for eFiling
    • Appoint a Registered Representative
    • Ensure that all the supporting documents are complete.
  • Branch Access: Taxpayers will be able to register for Income Tax and eFiling and at your local SARS branch. Branch visits must be booked using the online eBooking system.

As we roll out this system, we encourage all taxpayers and stakeholders to embrace the transition and thank you for supporting the digital transformation process. SARS will continue to provide updates to taxpayers and stakeholders throughout the transition period.

• 3 November 2025 – Public Notice of changes to S18A tax deductible receipts

A Notice has been published in terms of section 18A(2)(a)(vii) prescribing that further information must be contained in a receipt issued in terms of section 18A(2)(a) of the Act:

• • Income tax reference number no longer optional.
  • Information relating to bona fide donations of property made in kind:
    • An adequate and accurate description of the donation of property made in kind.
    • The deemed amount of the deduction of a donation of property made in kind determined under section 18A(3) or (3A) of the Income Tax Act.
• 30 September 2025 – Tax Exempt Institutions Connect Issue 9 (September 2025)

This issue discusses the compliance requirements for income tax exempt institutions and key compliance requirements for trusts that are approved Exempt Institutions (EI). It covers the trust-return submission periods and IT3(d) and IT3(t) submission and the updating of registered details.

We also offer tips when sending emails to SARS and stress the importance of using the services of registered tax practitioners.

• 23 July 2025 – New tutorial videos for Tax Exempt Institutions
  

  How to complete and submit the IT12EI return for approved Exempt Institutions on eFiling:

  • Part 1: Overview and how to login to eFiling
  • Part 2: How to request a return on eFiling
  • Part 3: How to complete the General Financial section on the return
  • Part 4: How to complete the Additional information and Trading activities on the return
  • Part 5: How to complete the Taxable income or loss and Tax-deductible receipts
• 30 June 2025 – Updated Tax Exemption Guide for Recreational Clubs (Issue 5)

Income Tax Act, 1962

• • Tax Exemption Guide for Recreational Clubs (Issue 5)

Summary

This guide provides general guidance on the –

• • approval by the Commissioner of aa recreational club under section 30A; and
  • partial taxation of approved recreational clubs under section 10(1)(cO) of the Income Tax Act 58 of 1962 (the Act).

The guide considers the following taxes and duties that may affect recreational clubs:

• • • Capital gains tax (see 11.3)
    • Dividends tax (see 11.2)
    • Donations tax (see 11.1)
    • Employees’ tax (see 12.5)
    • Estate duty (see 12.2)
    • Securities transfer tax (see 12.4)
    • Skills development levy (see 12.7)
    • Transfer duty (see 12.3)
    • Unemployment insurance fund contributions (see 12.6)
    • Value-added tax (see 12.8)

• Updated Tax Exemption Guide for Institutions, Boards, or Bodies (Issue 2)

The updated guide provides general guidance on the exemption from income tax of qualifying institutions, boards or bodies under section 10(1)(cA)(i) of the Income Tax Act 58 of 1962 (the Act).

These institutions, boards or bodies enjoy preferential tax treatment after they have been granted approval by the Commissioner and continue to comply with the relevant requirements and conditions as set out in the Act. Any institution, board or body approved by the Commissioner under section 10(1)(cA)(i) of the Act carrying on public benefit activities in Part II of the Ninth Schedule to the Act in South Africa may also qualify for approval under section 18A of the Act.

• Updated Tax Exemption Guide for Public Benefit Organisations in South Africa (Issue 7)

SARS has issued an update Tax Exemption Guide for Public Benefit Organisations in South Africa (Issue 7) which provides general guidance on the:

• • approval by the Commissioner of an organisation as a public benefit organisation (PBO) under section 30 of the Income Tax Act 58 of 1962 (the Act);
  • partial taxation of PBOs under section 10(1)(cN) of the Act; and
  • approval by the Commissioner of a PBO under section 18A(1)(a)(i) of the Act to issue section 18A receipts potentially entitling donor taxpayers to an income tax deduction for bona fide donations actually paid or transferred during a year of assessment.

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

• • Public Benefit Organisations
  • Recreational Clubs,
  • Membership Associations,
  • Small Business Funding Entities,
  • Home Owners Associations,
  • Government (Public) Institutions and
  • Private Companies owned by Government Institutions.

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.