The tax law allows approved Public Benefit Organisations (PBO), who have also obtained an additional SARS approval, to issue tax deductible donations certificates to donors. Practically, this means that supporting your favourite organisation also comes with a great SARS tax break as you get a specific tax deduction for your donation. The key to this claim is a so-called section 18A certificate. This is the document issued by a PBO, which is also a SARS Section 18A approved entity, validating to SARS that you have made a qualifying donation. 

A new rule, with a deadline of 31 May 2024, is critically important to ensure that the donation is allowed by SARS as a tax deduction. 

Section 18A approved entities are now compelled to provide SARS with section 18A third-party data submissions. This means that all approved entities that have issued section 18A tax deductible receipts to their donors from 1 March 2023 to 29 February 2024, must submit this data to SARS. If an approved entity has not issued any S18A receipts for the period, they must submit a NIL declaration. Failure to comply puts the special tax-deductible donation status at risk, as the PBO is no longer SARS compliant. There are serious consequences for any PBO as their SARS approval is critical for their continued tax status.

Therefore, it is essential that PBO’s make sure that this deadline is taken with the same seriousness as employers take on their IRP5 reconciliations, which share the same deadline date. The consequence of non-compliance is far beyond any SARS penalties, as it will automatically hit their donors’ personal tax compliance. The responsibility within a PBO would normally be with the Treasurer. Where you are the accountant or tax practitioner of a PBO, it would be good to check that the new form, called in the IT(3)(d), is on track for timely submission. 

Where you have made a donation to a PBO, you are probably the most important stakeholder, as you are making the tax claim in your personal tax return. When you log into your SARS e-filing profile for 2023/24, and there is no donation pre-loaded; it may be a good idea to check in with the PBO whether they have indeed done their timely third-party data submission. If the PBO has not made a correct third-party data submission, this may result in a document mismatch, and the verification of the tax return, placing the deduction and any resulting refund at risk.

It is therefore essential for PBO’s and their tax practitioners to ensure that they understand the process, gather the required information, and make timely submission. 

If you support a PBO, it will be good to do your due diligence that the organisation complies with the s18A requirements, to ensure the tax deductibility of your donations.

Written by Catherine Fourie, Head of CPD Consortium; and Roxshanna du Toit, Independent Trust & Fiduciary Services Expert