This document is an unofficial consolidation of the Ninth Schedule to the Income Tax Act 58 of 1962, introduced by section 41 of Act 30 of 2002 and the amendments effected by the Revenue Laws Amendment Act 45 of 2003. While care has been taken in its preparation, errors may exist and the original legislation should be consulted in case of doubt.
Gifts and donations to CHARITY FOUNDATION NPC are exempt from estate duty and donations tax. Donations, gifts and grants made to CHARITY FOUNDATION NPC are tax deductible in the hands of donors, subject to the limitations prescribed in section 18A of the Income Tax Act.
This is huge benefit to individuals and corporate entities and especially those with Marine right allocations in defined specie sectors individual’s right holder and entities right holders, as per DAFF regulations and FRAP policies.
TAX Exempt Organisations
- 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.
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 Unit (TEU).
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.
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 TEU, 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.
PUBLIC BENEFIT ACTIVITIES
(a) The advancement, promotion or preservation of the arts, culture or customs.
(b) The promotion, establishment, protection, preservation or maintenance of areas, collections or buildings of historical or cultural interest, national monuments, national heritage sites, museums, including art galleries, archives and libraries.
(c) The provision of youth leadership or development programmes.
7. Conservation, Environment and Animal Welfare
(a) Engaging in the conservation, rehabilitation or protection of the natural environment, including flora, fauna or the biosphere.
(b) The care of animals, including the rehabilitation, or prevention of the ill treatment of animals.
(c) The promotion of, and education and training programmes relating to, environmental awareness, greening, clean-up or sustainable development projects.
The administration, development, co-ordination or promotion of sport or recreation in which the participants take part on a non-professional basis as a pastime.
10. Providing of funds, assets or other resources
The provision of—
(a) funds, assets, services or other resources by way of donation;
(b) assets or other resources by way of sale for a consideration not exceeding the direct cost to the organisation providing the assets or resources;
(c) funds by way of loan at no charge; or
(a) The provision of support services to, or promotion of the common interests of public benefit organisations contemplated in section 30 or institutions, boards or bodies contemplated in section 10(1)(cA)(i), which conduct one or more public benefit activities contemplated in this part.
[Subparagraph (b) amended by section 126 of Act 45 of 2003]
1. Welfare and Humanitarian
(a) The care or counseling of, or the provision of education programmes relating to, abandoned, abused, neglected, orphaned or homeless children.
(b) The care or counseling of poor and needy persons where more than 90 per cent of those persons to whom the care or counseling are provided are over the age of 60.
(c) The care or counseling of, or the provision of education programmes relating to, physically or mentally abused and traumatised persons.
(d) The provision of disaster relief.
(e) Legal assistance to the needy
(f) The provision of poverty relief.
(g) The rehabilitation, care or counseling of persons addicted to a dependence-forming substance or the provision of preventative and education programmes regarding addiction to dependence-forming substances.
(i) Conflict resolution, the promotion of reconciliation, mutual respect and tolerance between the various peoples of South Africa.
(j) The promotion or advocacy of human rights and democracy.
(k) The protection of the safety of the general public.
(l) The promotion or protection of family stability.
(m) The provision of legal services for poor and needy persons.
(n) The provision of facilities for the protection and care of children under school-going age of poor and needy parents.
(o) Community development for poor and needy persons and anti-poverty initiatives, including—
(i) the promotion of community-based projects relating to self-help, empowerment, capacity building, skills development or anti-poverty;
(ii) the provision of training, support or assistance to community-based projects contemplated in item (i); or
(iii) the provision of training, support or assistance to emerging micro enterprises to improve capacity to start and manage businesses, which may include the granting of loans on such conditions as may be prescribed by the Minister by way of regulation.
[Subparagraphs (c) to (q) added by section 127 of Act 45 of 2003]
3. Education and Development
(a) The provision of education by a ‘‘school’’ as defined in the South African Schools Act, 1996, (Act No. 84 of 1996).
(b) The provision of ‘‘higher education’’ by a ‘‘higher education institution’’ as defined in terms of the Higher Education Act, 1997, (Act No. 101 of 1997).
(c) ‘‘Adult basic education and training’’, as defined in the Adult Basic Education and Training Act, 2000 (Act No. 52 of 2000), including literacy and numeracy education.
(d) ‘‘Further education and training’’ provided by a ‘‘public further education and training institution’’ as defined in the Further Education and Training Act 1998, (Act No. 98 of 1998).
(e) Training for unemployed persons with the purpose of enabling them to obtain employment.
(f) The training or education of persons with a severe physical or mental disability.
(g) The provision of bridging courses to enable educationally disadvantaged persons to enter a higher education institution as envisaged in subparagraph (b).
(h) The provision of educare or early childhood development services for pre-school children.
(i) The provision of school buildings or equipment for public schools and educational institutions engaged in public benefit activities contemplated in subparagraphs (a) to (h).
(j) Programmes addressing needs in education provision, learning, teaching, training, curriculum support, governance, whole school development, safety and security at schools, pre-schools or educational institutions as envisaged in subparagraphs (a) to (h).
(k) Educational enrichment, academic support, supplementary tuition or outreach programmes for the poor and needy.
(l) Career guidance and counseling services provided to persons for purposes of attending any school or higher education institution as envisaged in subparagraphs (a) and (b).
(m) The provision of hostel accommodation to students of a public benefit organisation contemplated in section 30 or an institution, board or body contemplated in section 10(1)(cA)(i), carrying on activities envisaged in subparagraphs (a) to (g).
(n) The provision of scholarships, bursaries and awards for study, research and teaching on such conditions as may be prescribed by the Minister by way of regulation in the Gazette.
[Subparagraphs (l) to (o) added by section 129 of Act 45 of 2003]
5. Land and Housing
(a) The development, construction, upgrading, conversion or procurement of housing units for the benefit of persons whose monthly household income falls within the housing subsidy eligibility requirements of the National Housing Code published pursuant to section 4 of the Housing Act, 1997 (Act No. 107 of 1997).
(b) The development, servicing, upgrading or procurement of stands, or the provision of building materials, for purposes of the activities contemplated in subparagraph (a).
[Paragraph 5 added by section 130 of Act 45 of 2003]