New Requirements for PBO Donations
Public Benefit Organisations (PBO’s) play an important role in addressing the social, economic, and financial challenges in the South African society.
Section 18A of the Income Tax Act provides for a tax deduction of up to 10% of a taxpayer’s taxable income in respect of donations made to qualifying PBO’s. This includes companies and individuals.
To date, PBO’s were only required to issue receipts containing prescribed information (referred to as section 18A certificates) in respect of all donations received by them. Now all PBO’s are also required to submit bi-annual reports to SARS of all donations received by them.
All PBOs or any person that issues a receipt in terms of section 18A(2) of the Act, is now required to submit third-party returns for any amount received as a donation, in the form of an IT3(d) or data compiled in accordance with SARS Business Requirement Specification, IT3 Data Submission. The return must be submitted electronically on the SARS e-filing platform.
Annually, the first submission will be for the period from 1 March to 31 August and will be due by 31 October. The second submission will be for the period from 1 September to the last day of February and will be due by 31 May.
The first submission date will be 31 May 2024 for the period 1 September 2023 to 28 February 2024 regardless of the financial year end of the PBO. This is to allow affected PBO’s the opportunity to upgrade their systems and processes to implement the new filing requirements.
SARS also requires more detailed information to be included on all section 18A certificates issued on or after 1 March 2023. These requirements are contained in Public Notice 3631, issued on 30 June 2023.
Until 28 February 2023, all that was required for a valid Section 18A certificate was:
- the name;
- reference number;
- address and contact details of the PBO;
- details of the donation (date of receipt, amount, and nature of donation if not made in cash);
- name and address of the donor;
- and confirmation that the donation would be used exclusively for the object of the PBO.
From 1 March 2023, the certificate must also include:
- Donor nature (natural person, company, trust, etc.);
- Donor identification type and country of issue (in the case of a natural person);
- Identification or registration number of the donor;
- Income tax reference number of the donor (if available);
- The contact number of the donor;
- E-mail address of the donor;
- A unique receipt number; and
- Trading name of the donor (if different from the registered name).
Please contact our tax department if you are unsure of your reporting obligations or require assistance with implementing the necessary changes to your systems and processes.