Deadline looming for s18A Public Benefit Organisations - new declaration of s18A receipts
Being a registered PBO* brings wonderful benefits, but if you are one then you will know the equal weight and necessity of compliance with SARS requirements. This has gotten that much more onerous in the past year - with updated needs for s18A receipts, and now with the need for bi-annual declaration of receipts to SARS.
Updated Requirements for s18A-receipt* compliance (for PBOs)
Previously this was enough:Standard printed PBO info:
PBO name,
PBO reg. number,
PBO address and contact details
Written confirmation that the donation is be used exclusively for the object of the PBO, to carry out its registered public benefit activities (PBAs) in accordance with Part II of the 9th Schedule.
Receipt info:
Receipt number (sequential numbering and recorded in a register)
Date of receipt
Amount (if cash paid)
If it’s a donation in kind, then the nature and value. It could be: trading stock, assets and equipment/goods, property or installations, listed shares from a financial institution.
Donor:
Name
Address
All of that needs to be on the receipt you give/send to the donor, and you need to record that in a register.
New additional requirements (as of 1Mar2023):Donor info:
Nature of person (natural person or juristic person: Company, CC, Trust, etc);
SA Income tax ref. no. (if SARS tax registered);
Contact details: tel. no. and email
For natural persons:
ID no. or for foreigners: Passport no. and country of issue
For Juristic persons:
Registration number
Trading name
If your current receipts do not meet these requirements then we urge you to make the needed amendments asap.
Contact us for help with setting up a receipt template or for further assistance.
*Some explanation, in case you need a catch-up: a PBO, is a "public benefit organisation"…but in essence it simply means that you are successfully registered with SARS for tax exemption (no income tax, donations tax, provisional tax, etc).
PBOs can also be one or more of these things:
A non-profit company, a Trust, a board, a society or club or association of persons, a public institution (board, body etc), a specialised agency, the government, or branch of a foreign tax-exempt organisation.
classified as a Charity, or a "Welfare organisation" (…amazing benefits if registered for VAT);
registered NPO (with the Dept of Social Responsibility);
a s18A PBO: Have activities (PBAs) that allowed them to register - with SARS again - as a particular subset of PBO listed in Section 18A of the Income Tax Act. In brief we refer to them as s18A PBOs. This is a huge Income Tax benefit as all donations are not only tax exempt, but also tax deductible for the donor, and the upside of that is that you can attract more donations because all your SA donors get a tax rebate…But: you need to ensure compliance with SARS rules, and issue a compliant s18A receipt, plus now: submit a bi-annual recon.
Third-party data declaration to SARS
This is brand new: SARS including all s18A registered entities in the net for the IT3 data declaration, in which the register of s18A receipts will need to be submitted to SARS. The filing period is now open. You have until 31May to declare your s18A receipts for the 2024 tax year (1Mar23-29Feb24).
More info:
Summary of main compliance aspects for s18A PBOs
Ensure that the objects for which that section 18A-approved organisation was established have been carried out;
Ensure that 18A receipts are expended on the s18A PBAs (part II of the 9th Schedule) as registered
Ensure compliant s18A receipts/donor certificates issued (updated March 2023)
Bi-annual third-party data declaration of s18A receipts to SARS - IT3(d) (from May 2024)
Ring-fencing of s18A donations for conduit or combination-PBA PBOs.
Conduit PBOs must distribute min. 50% of all s18A receipts within 12mths of the end of the year of assessment (YOA)
A further super-important note about ensuring that receipts do qualify for s18A receipts: SARS' guide says It best in point10:
10. Donations
A donation is given voluntary and freely by the donor (the person giving the donation) out of liberality or generosity to a donee (the person receiving the donation) without expecting anything in exchange. By the giving of a donation, the donor is impoverished and the donee enriched. There must be no conditions or obligations attached to a donation and no personal benefit for the donor. If a donee gives any consideration in exchange, it is not a donation.
…please do read the whole section; and document (above link)
Please reach out to us if you need help. PRSM oversees the compliance of numerous PBOs, from registration to dissolution and most especially: the amazing year-on-year operations - taking the uncertain and risk-rich landscape and turning it into focused and effective peace of mind.