Tax Exempt Institutions

What’s New

• 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)
• 27 June 2025 – Tax Exempt Institutions Connect Issue 8 (June 2025)

The latest edition of the Tax Exempt Institutions Connect issue 8 is now available.  This issue informs taxpayers about SARS’s digital channels and the importance of keeping registered details up to date. We cover eFiling features for Tax Exempt Institutions, including improvements to the Auto-Merge function. We discuss features of the SARS Online Query System (SOQS). This issue guides taxpayers on how to update their registered details, including banking information. Lastly, we highlight educational micro-learning videos available on the SARS YouTube channel.

• 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.