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Tax Exempt Organisations

What’s New

  • 7 October 2021 – Submitting an application for Tax Exemption:

    To submit an application for exemption at your nearest  SARS Branch Office, request an online appointment booking and select ‘Telephonic engagement’ for the Appointment Channel, then ‘Other’ for the ‘Reason Category’ and then ‘Application for Exemption (EI1)’ as a reason for the appointment. This option was temporarily unavailable and has been restored. Once the appointment has been made, a case reference number will be issued which must be used to upload the application forms and supporting documents on the SARS Online Query System (SOQS). SARS will be in contact with the applicant to confirm the type of appointment and confirm if all the required documents have been uploaded.

    Once you have uploaded to documents, email the case number to the following email address for processing: [email protected].

  • 6 July 2021 – Filing Season 2021 claims: 

    See the following important information on the Tax Exempt Institution, Section 18A donations and Solidarity Fund donations:
    • Tax Exempt Institution Fact Sheet 2020/2021
    • Solidarity Fund clarifications 2020/2021
    • Frequently Asked Questions:
      • How do I claim S18A deductions on the ITR12 return?
        To claim donations made by the donor in a personal capacity, the following questions must be answered on the return wizard:
        • Do you want to claim donations made to an approved organization(s) in terms of s18A?
        • How many organizations did you donate to?
          Upon answering these questions, the donation containers for both source codes 4055 & 4011 will open on the return.
      • Which container is applicable for donations made to S18A-approved institutions, other than the Solidarity Fund?
        Select source code 4011 (4055 only relates to donations made to the Solidarity Fund during the period April 2020 and September 2020).
      • Which documents are required to support my S18A claim?A valid section 18A certificate provided by a S18A-approved organization. If the donation was made through your employer, the IRP5 certificate issued by your employer will suffice.
      • Where will I see the donations made through my employer on my return?
        The amount donated through your employer will be reflected on your IRP5 and will therefore be pre-populated under “Employee Tax Certificate Information [IRP5/IT3 (a)]” on your return.
  •  

Not for Profit Organisations and Tax

Not for profit organisations play a significant role in society as they take a shared responsibility with Government for the social and development needs of the country. Preferential tax treatment is designed to assist non-profit organisations by augmenting their financial resources.   The preferential tax treatment for not for profit organisations is however not automatic and organisations that meet the requirements set out in the Income Tax Act, 1962, must apply for this exemption.  If the exemption application has been approved by SARS, the organisation is registered as a Public Benefit Organisation (PBO) and allocated a unique PBO reference number.   It is important to note that an organisation that has a non-profit motive or is registered as a non-profit organisation (NPO) or Non Profit Company (NPC) does not automatically qualify for preferential tax treatment. An organisation will only enjoy preferential tax treatment after it has applied for and been granted approval as a Public Benefit Organisation (PBO) by the Tax Exemption Institution (TEI).

What is a Public Benefit Organisation (PBO)

The conditions and requirements for an organisation to be approved as a PBO are contained in section 30 while the rules governing the preferential tax treatment of PBOs are contained in section 10(1)(cN). Section 10(1)(cN) provides for the exemption from normal tax of certain receipts and accruals of approved PBOs. Certain receipts and accruals from trading or business activities will nevertheless be taxable.   Approved PBOs have the privilege and responsibility of spending public funds, which they derive from donations or grants, in the public interest on a tax-free basis. The donations or grants may be received from the general public or directly or indirectly from the State. It is therefore important to ensure that exempt organisations use their funds responsibly and solely for their stated objectives, without any personal gain being enjoyed by any person including the founders and the fiduciaries.  Approved PBO’s must continue to comply with the Act and related legislation throughout their existence. This includes the submission of annual income tax returns on an IT12EI – Return of Income Exempt Organisations – External Form. The income tax return enables the Commissioner to assess whether the approved PBO is operating within the prescribed limits of the relevant approval granted and to determine whether the partial taxation principles must be applied to receipts and accruals derived from a trading activity or business undertaking which does not qualify for exemption.

An organisation which provides scholarships, bursaries and awards for study, research or teaching must comply with the conditions prescribed in Regulation R.302 (published in Government Gazette No. 24941 on 28 February 2003).

Tax deductible donations (Section 18A receipts)

The South African Government has recognised that certain organisations are dependent upon the generosity of the public and to encourage that generosity has provided a tax deduction for certain donations made by taxpayers. The eligibility to issue tax deductible receipts is dependent on section 18A approval granted by the TEI, and is restricted to specific approved organisations which use the donations to fund specific approved Public Benefit Activities.  A taxpayer making a bona fide donation in cash or of property in kind to a section 18A-approved organisation, is entitled to a deduction from taxable income if the donation is supported by the necessary section 18A receipt issued by the organisation or, in certain circumstances, by an employees’ tax certificate reflecting the donations made by the employee. The amount of donations which may qualify for a tax deduction is limited.  

Submission of IT12EI (Income Tax Return)

Exempt organisations must annually submit an IT12EI – Return of Income Exempt Organisations – External Form income tax return in the following manner:

  • Through eFiling if you are a registered eFiler; should you need assistance with efiling registration, please send an email to [email protected] and provide your correct contact details, an Agent will call you within 72 hours to guide you through the eFiling registration process.  Only then will you be able to file a return for the entity.
  • By making an appointment to visit the TEI office where you will be assisted to register on eFiling from your own cell phone device or on a SARS device.

Note: The return for companies must be completed and submitted within 12 months of the financial year end of the exempt institution, but the returns for trusts or other entities must be completed and submitted annually by the due dates announced by SARS.   For help with the completion of the IT12EI return, you can refer to How to Register for eFiling and Complete the IT12EI Return for Tax Exempt Organisations – External Guide.

TEI Service Offering

The TEI is a dedicated office within SARS which deals with all applications by non-profit organisations for approval as PBOs.  In order to prevent malpractice and abuse, the TEI also monitors compliance by PBOs with the requirements for approval. The TEI is also responsible for the assessment function. The TEI considers applications for exemption from income tax in respect of the following provisions of the Income Tax Act, 1962: –    

10(1)(cN) All Public Benefit Organisations (PBO’s) engaged in activities such as crèches, welfare, health and conservation schools
Section 10(1)(cA)(i) Institution, Board, or Body established by or under any law
Section 10(1)(cA)(ii) Any South African company of which all the shares are held by a body exempt in terms of section  10(1)(cA)(i).
Section 10(1)(cO) Recreational Club
Section 10(1)(d)(iii) Fidelity or Indemnity Fund; Trade Union; Chamber of Commerce or Industries (or an Association of such Chambers); Mutual Loan Association; Local Publicity Association.
Section 10(1)(d)(iv)(bb) Company, society or other association of persons established to promote the common interest of persons, carrying on any particular kind of business, profession or occupation.
Section 10(1)(e)(i)(cc) Association of persons formed for managing the collective interests common to all its members in respect of expenditure applicable to the common immovable property
Section 18A: Approval for tax deductible donations

The TEI does NOT consider exemption applications for Individuals, Labour Brokers (IRP30), Co-operatives, Close Corporations, Special Trusts, Body Corporates, Share Block Companies, VAT, PAYE/UIF/SDL, Benefit Funds and Burial Societies. For assistance on any of these, please phone the Contact Centre on 0800 00 7277.  

Contact details of the Tax Exemption Institution 

Physical address: 2nd floor, SARS Pretoria CBD branch,
C/o Lillian Ngoyi and Francis Baard Streets
Pretoria, 0002

Postal address:

P.O. Box 436
Pretoria
0001  

Telephone: 012 – 483 1700

Fax: 012 – 483 1701

Email: [email protected]  

 

Frequently Asked Questions

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