What are they? Audit certificates are a record produced each year and kept on file certifying/giving an opinion on the use of funds for which 18A receipts were issued.  According to s18A(2B), a PBO which falls under section 18(2A), must obtain and retain an audit certificate. This audit certificate confirms that all donations received or accrued in the year for which they were issued were used for 18A activities. Who needs them? Not all 18A organisations are required to prod...

The current provisions of section 18A of the Income Tax Act requires that 18A receipts which are issued to donors include the following details: 18A RECEIPT:  Your organisation’s name, address and PBO number; The donor’s name and address; The date the donation was received; The amount of a monetary donation/nature and value of property donated; The required certification being: we hereby certify this receipt is issued for the purposes...

Some people believe that trading is prohibited for PBOs, and others that all income of PBOs is tax exempt. Neither of these is true, and the answer lies somewhere between the two extremes: Under Section 10(1)(cN) of the Income Tax Act, all non-trading income and some types and parts of trading income are exempt from tax if the organisation has PBO status.Any organisation with PBO status potentially receives three categories of income: Non-trading tax exempt income; Non-taxable tradin...

Inyathelo, The South African Institute for Advancement, is dedicated to helping build a strong, stable civil society and democracy in South Africa by contributing to the development of sustainable organisations and institutions. In advisory sessions over the years, many non-profit organisations (NPOs) have faced growing challenges in covering core costs and have approached Inyathelo for guidance and support. Coupled with the reality of an economic downturn and a change in donor funding focus...

In our experience in working with non-profit organisations, we have encountered some common myths in relation to tax. Unfortunately, the impact of these myths can be devastating for these organisations, so here we try to debunk them. Myth 1: “Non-profit entities are not taxpayers” Every legal entity must be registered as an income taxpayer with SARS (and have an income tax number) and submit an annual tax return, including non-profit organisations. Every legal entity, whether for-profit ...

 Ensure that the full, realistic costs of the project are included in the budget, including the staff and support (overhead) costs Projects are generally carried out within the context of an established organisation, with all its necessary infrastructure and systems. It is therefore right that the funding for each project also contributes proportionately towards these costs. When submitting the budget, be clear about the basis on which these costs are shared or allocated. Even...

Depending on their activities, public benefit organisations (“PBO’s”), as well as certain institutions and Government departments, can apply to SARS for approval in terms of Section 18A of the Income Tax Act. If this approval is granted, their donors can obtain a limited tax deduction (generally speaking of up to 10% of their taxable income in a tax year) in respect of the total donations made to such approved organisations. If an organisation has not formally received this approval from SAR...