More information to be included on Section 18A receipts
16 March 2023
Organisations that receive donations from the public and utilize such funds to carry on or fund specific public benefit activities are eligible to register as Public Benefit Organizations (“PBO’s”) with SARS.
A tax deduction for donations to approved PBO’s by taxpayers, in most cases capped at 10 per cent of the taxpayer’s taxable income, is enabled through the issuance of a section 18A receipt by the PBO. A PBO must formally apply to the Commissioner for approval for purposes of section 18A of the Income Tax Act and in order to be approved, the PBO has to carry on certain specific Public Benefit Activities which are contained in Part II of the Ninth Schedule to the Income Tax Act. An application for approval for purposes of section 18A can be made simultaneously when an organisation applies for approval as a PBO under section 30.
SARS does not make section 18A receipts available to section 18A approved organisations. Organisations that are approved for purposes of section 18A must create their own receipts ensuring that the following information appears on the receipt in terms of section 18A(2)(a) of the Act:
- The reference number issued to the section 18A approved organisation by the Commissioner for purposes of section 18A.
- The date the donation is received.
- The name and address of the section 18A approved organisation issuing the section 18A receipt to which enquiries may be directed.
- The name and address of the donor.
- The amount of the donation if in cash or the nature of the donation and the value of the donation, if not in cash.
- A certification to the effect that the receipt is issued for purposes of section 18A and that the donation has been or will be used exclusively for the objects of the PBO.
- Any further information the Commissioner may prescribe by public notice to ensure consistency with third party reporting to make it easier for donors receiving section 18A receipts and section 18A approved organisations issuing such receipts to comply with their obligations.
On 24 February 2023, Government Gazette Notice 3082 was issued to indicate that section 18A receipts will be required to stipulate further information. The Notice comes into effect for receipts issued on or after 1 March 2023.
The following additional information must, from that date, be included on a section 18A receipt:
- Legal nature of the donor being a natural person, company, or trust.
- 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).
- Contact number of the donor.
- Email address of the donor.
- A unique receipt number; and
- Trading name of the donor (if different from the registered name).
Taxpayers and PBO’s must ensure that the section 18A receipts issued contain all the requisite information as required above. Failure to include this additional information on the section 18A receipt will prohibit any deduction for donations made to the organisation in question, resulting in the raising of additional assessments by SARS and non-compliance with the section by the PBO.
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