FAQs

What is a section 18A certificate?

A section 18A certificate is a document that is issued by a section 18A-approved public benefit organisation (or PBO) to a taxpayer who has made a donation to the PBO.

In other words, if you have made a donation to a charitable organisation, you may be able to get a section 18A certificate.

Why should I want a section 18A certificate?

If you are a taxpayer and have made a donation to a section 18A-approved PBO, the section 18A certificate will allow you to claim a tax deduction subject to a certain limit. This means that the more you donate, the less tax you will pay on your remaining income!

But, the section 18A certificate issued by a section 18A-approved organisation is important – without it, the tax deduction cannot be claimed.

Is there a limit on the amount of donations for which I can claim a tax deduction?

Yes. There is a limit. The current limit is 10% of your taxable income (excluding any retirement fund lump sum benefit, retirement fund lump sum withdrawal benefit, and severance benefit), as calculated before allowing any deduction for donations under section 18A or a deduction for foreign taxes. For example, if your taxable income for a particular year of assessment amounts to ZAR 100,000, the tax deduction would be limited to ZAR 10,000.

But remember, the more that you donate up to the 10% limit, the more you can claim as a tax benefit. And don’t worry – if you donate over 10% of your taxable income in a year under assessment, you can then claim the tax deduction benefit during the next year under assessment. So the tax benefit connected with a donation will not be lost!

Would I be able to get a section 18A certificate from any charity organisation or non-profit organisation (or NPO)?

This is important. Only non-profit organisations that are PBO’s who have been approved by the Commissioner for SARS under the Income Tax Act to issue section 18A certificates may issue such certificates.

This means that, if you want to claim the tax benefit, your donation must be made to section 18A-approved organisations only.

How can I check whether an organisation can issue a section 18A certificate?

SARS maintains a list of approved section 18A organisations which can be accessed on the SARS website here.

Would I be able to get a section 18A certificate for any donation?

No, only certain donations qualify for a section 18A certificate.

Section 18A certificates may only be issued in respect of donations made in cash (money) – including payments by electronic fund transfer (EFT), credit or debit card, or postal order – or in other goods, actually paid or transferred by you to the organisation in the year of assessment.
A section 18A certificate will not be issued if the donation consists of free services (time, effort or skill) rendered to the PBO. For example, an auditor, accountant, electrician, or lawyer who renders a service free of charge to a section 18A-approved organisation will not be entitled to a tax deduction for the value of the service.
There are other instances in which a section 18A certificate will not be issued – it is very important to check with the PBO whether a section 18A certificate will be issued. SARS provides strict guidelines as to what tax-deductible receipts may be issued for.
The donation must be voluntary and must be gratuitous. In other words, the donation cannot be payment for the supply of goods or services, and it cannot benefit you, as the donor, or anyone connected with you. It must be made out of generosity to the organisation.

I have made a donation to a section 18A-approved organisation. What documents should I receive?

As a taxpayer, you will only be allowed to claim a deduction for a donation to a section 18A approved organisation if it is supported by a section 18A receipt or certificate issued by the organisation.

This means that you must receive a section 18A receipt or certificate from the section 18A-approved organisation in order to claim the tax benefit.

Should I also get a tax invoice for my donation?

No. A tax invoice will not (and should not) be issued – it is only the section 18A certificate that is required for the purposes of claiming the tax deduction.

I received my section 18A certificate for my donation. How do I go about claiming my section 18A tax deduction?

On completing your annual income tax return, as a donor you will be required to provide the following information contained on each section 18A certificate:

the amount donated to each PBO; and
the relevant approved PBO reference number of each PBO.

You will be able to find all of this information on your section 18A certificate.

You will need to upload the section 18A certificates to SARS via eFiling if SARS selects your income tax return for review/audit verification. You must also keep your section 18A certificates (along with all other tax related information relevant to your income tax returns) for a period of at least 5 years from the date of the assessment.

What if the donation is made by my employer?

In some circumstances, by an employees’ tax certificate reflecting the donations made by the employer.

How does DoNation work?

DoNation makes it easy for you to get your section 18A certificate from an organisation who you have donated to, both after making the donation and again during tax season.

You will be able to log into www.thedonation.org.za at any time to see the status of all your donations and access any of your section 18A certificates. You will also receive detailed instructions from DoNation regarding how you should make use of your section 18A certificates which can be sent to your accountant or used by you when completing your eFiling.

How does DoNation use your data?

Only personal information or data that is necessary for the purposes stated in the Privacy Policy will be collected, used and otherwise processed by Silvertree Foundation.

What do I do to use this?

Follow our easy, step-by-step guide, to sign up and start getting back up to 45% in tax refunds on your donations.

Our organisation is getting requests for section 18A certificates. What is this?

As most charitable organisations or non-profit organisations need donations in order to operate, the South African Government has provided a tax deduction for certain donations made by taxpayers.

However, not all donations made to charities are tax deductible and section 18A of the Income Tax Act makes provision for the issuing of tax-deductible receipts to taxpayers by certain approved organisations. This means that, to be able to claim a tax deduction, a donor must be in possession of a valid section 18A receipt or certificate.

Can all charitable and non-profit organisations issue section 18A certificates?

No. The tax benefit is not automatic and not all charitable and non-profit organisations can issue section 18A certificates.

What is a PBO and would our organisation meet the requirements for a PBO?

A PBO or public benefit organisation must meet the following requirements: A PBO is a public benefit organisation which is entitled to preferential tax treatment under the Income Tax Act. The conditions and requirements for an organisation to be approved as a PBO are set out in section 30 of the ITA.

The organisation must be a non-profit organisation.
The organisation’s sole or principle objective or goal must be to carry on one or more public benefit activities, where
all the activities are carried on in a non-profit manner; and
with an altruistic of philanthropic intent; and
no such activity is intended to directly or indirectly promote the economic self-interest of any fiduciary or employee of the organisation – other than by way of reasonable remuneration payable to that fiduciary or employee.
Each of the activities must be for the benefit of the public or must be widely accessible to the public at large, including any sector (other than small and exclusive groups).

Our organisation meets the requirements of a PBO. Does it now automatically qualify for PBO status and the preferential tax treatment?

No. The fact that your organisation complies with the requirements set out in section 30 of the ITA, does not automatically grant your organisation a tax exemption.

In order to qualify for the exemption, your organisation must apply to SARS for its PBO status. This application must be submitted to SARS’s tax exemption unit (or TEU). Together with your application, you must also submit your organisation’s founding document (which must contain the required information).

Once your organisation’s application has been approved, your organisation will no longer be liable for income tax (and donations tax). However, please keep in mind that your organisation must still submit annual tax returns, as this obligation does not fall away. This form can be obtained from SARS.

Our organisation is a registered PBO with SARS. Now, how would my organisation go about applying for section 18A approval?

A formal application, on the prescribed application form (which is available on the SARS website), must be completed and submitted to the Tax Exemption Unit (or TEU) within SARS for consideration and approval under section 18A of the Income Tax Act.

The organisation must clearly state on the application form which activities, as listed in Part II of the Ninth Schedule to the Income Tax Act, the organisation is conducting and motivate how the activities of the organisation fall within the scope of the section 18A activities. A copy of the organisation’s latest available financial statements must also be submitted. The Commissioner of SARS must issue a reference number for the purposes of section 18A (which is different to a taxpayer reference number) and this number must appear on the section 18A certificate issued to donors.

Must our organisation first register for PBO status and only then apply for the section 18A exemption, or can these approval processes take place at the same time?

The application for approval under section 18A of the Income Tax Act may be done at the same time as an application for approval as a PBO under section 30 of the Income Tax Act.

What organisations will not be granted section 18A approval?

If the organisation does not conduct the public benefit activities listed in Part II to the Ninth Schedule to the Income Tax Act, the organisation will not be able to issue section 18A certificates. This includes the following activities undertaken by a PBO:

religion,
belief or philosophy,
culture,
research and consumer rights, and
sport

My organisation is already a registered non-profit organisation. Does this mean that it is a PBO and can it now issue section 18A certificates?

No. The process to register as a non-profit organisation (NPO) or Non Profit Company (NPC) does not mean that an organisation will automatically qualify as a PBO or for the section 18A tax benefit. These are different processes with different consequences.

Registration as an NPO is also not a condition for approval as a PBO since the registration as an NPO under the NPO Act is a voluntary registration lodged with the Directorate of NPOs. Useful information can be obtained from the Department of Social Development’s website at www.dsd.gov.za.

Can I check whether our organisation can already issue a section 18A certificate?

SARS maintains a list of approved section 18A organisations which can be accessed on the SARS website here.

Our organisation is a registered PBO and has received the section 18A approval from SARS. When should our organisation issue a section 18A certificate?

Section 18A certificates may only be issued in respect of donations issued in cash (money) or kind (other than services). A section 18A certificate may not be issued if the donation consists of free services rendered to the PBO.

A section 18A receipt may also be issued only for an eligible donation that is solely and exclusively used for public benefit activities, as listed in Part II of the Ninth Schedule to the Income Tax Act, in South Africa.

Who is responsible for issuing the section 18A certificates – our organisation or SARS?

Section 18A-approved organisations must create their own receipts ensuring that all appropriate details appear on the section 18A certificate or receipt. Importantly, SARS does not make section 18A receipts available to section 18A-approved organisations.

What details must be on the section 18A certificate?

The section 18A receipt or certificate issued by the organisation must include the following details:

Information required

The reference number of the organisation issued to it by the Commissioner for purposes of section 18A
The date of the receipt of the donation
The receipt is to reflect a unique number
The name and address of the organisation issuing the receipt to which enquiries may be directed
The name, address email address and contact number of the donor or trading name of the donor (if different from the registered name)
The donor nature of person (natural person, company, trust, etc)
The donor identification type and country of issue (in case of a natural person)
The donor identification or registration number
The income tax reference number of donor (if available)
The amount of the donation if the donation was made in cash yes or no
The nature (and value) of the donation if the donation was not made in cash (unlikely in the case of DoNation)
A certification that the receipt is issued for the purpose of section 18A and that the donation will be used exclusively for the activities which are approved for section 18A purposes (in carrying on relevant public benefit activities)
The receipt must be issued in the year when the donation is received by the organisation approved for purposes of section 18A

Can I see an example of what the section 18A certificate should look like?

What is a high-level takeaway of our organisation’s obligations?

Make sure that your organisation:

Complies with the rules and regulation of section 30 of the ITA

Uses, or will use, the donations solely in pursuance of the organisation's objectives

Has provided SARS with its current/updated documents

Issues section 18A receipts to all qualifying taxpayers

Submitted its annual tax returns

Informs SARS of any changes relating to the nature or status of the organisation

Is there anything else our section 18A-approved organisation should be thinking about?

It is very important that section 18A-approved organisations maintain proper control over the application and spending of donations received that qualify for a tax deduction.
‍
This means that the record-keeping of a PBO must clearly identify the donations received for public benefit activities in Part II of the Ninth Schedule to the Income Tax Act and the use to which those donations were applied.
‍
Depending on the public benefit activities carried on (i.e. if carrying on combination of public benefit activities listed in Part I and Part II), a section 18A-approved organisation has an obligation to obtain, retain or submit an audit certificate to the Commissioner of SARS. This audit certificate must be kept for record-keeping purposes. The audit certificate must confirm the following:

The name and address of the approved organisation
The reference number issued to the approved organisation by the Commissioner for the purposes of section 18A
The taxpayer reference number of the approved organisation
Full name, signature and designation of the person responsible for issuing the audit certificate
Full name, signature and designation of the person responsible for issuing the audit certificate
Details of the section 18A receipts issued by the organisation; e.g. the number of section 18A certificates issues and the total rand value of the donations for which section 18A certificates were issued, and that all donations received or accrued during the year for which the PBO issued section 18A certificates were used solely in carrying on public benefit activities in Part II of the Ninth Schedule to the Income Tax Act, in South Africa.

The person who issues the audit certificate must be independent from the activities of the organisation, as it serves as a control mechanism implemented by SARS, and must be suitably qualified.
‍
PBOs carrying on only public benefit activities in Part II of the Ninth Schedule to the Income Tax Act in South Africa are not required to obtain and retain an audit certificate.

How does DoNation work?

DoNation makes it easy for your organisation to provide section 18A certificate to a taxpayer who has made a bona fide donation, both at the time of the donation being made and again during tax season.

The donor will be able to log into www.thedonation.org.za at any time to see the status of all his or her donations and access any of their section 18A certificates. The donor will also receive detailed instructions from DoNation regarding how they should make use of their section 18A certificates which can be sent to their accountant or used by them when completing their eFiling. This will also help your organisation from an administrative perspective, rather than having to deal with numerous requests for section 18A certificates.

How does DoNation use the organisation’s and donor’s data?

Only personal information or data that is necessary for the purposes stated in the Privacy Policy will be collected, used and otherwise processed by Silvertree Foundation.

What does our organisation need to do to use this?

Follow our easy step-by-step 10 minute guide to add our donation form to your donations page allowing donors to register their donations. For more detail please go here.

Can we record donations received offline, and use DoNation to send 18A certificates?

Yes! Once registered, you can record donations, along with the details of the donor, and we'll generate and send an 18A receipt to the donor on your behalf.

Who can assist us with any of the PBO registration processes?

Jacky Botha Accounting Services
Tel: 087 012 5962
Email: jbaccservices@gmail.com
https: //www.jbaccservices.com/

Got a question?

FAQs