NON PROFIT/PUBLIC BENEFIT ORGANISATIONS

Non-profit organisations (NPO’s), such as conservancies, play a significant role in society as they undertake a shared responsibility for the social and development needs of the country thereby relieving the financial burden, which otherwise falls on the State. Tax benefits are designed to assist non-profit organisations by augmenting their financial resources and providing them with an enabling environment in which to achieve their objectives. The mere fact that an organisation has a non-profit motive or is established or registered as an NPO does not mean that it is automatically exempt from income tax. The organisation will only be exempt from income and related taxes if it is specially approved for this purpose by the Commissioner and if it complies with the relevant requirements and conditions as set out in the Act.

In South Africa, religious, charitable and educational institutions of a public character were formerly exempt from income and related taxes. However, in the absence of comprehensive case law and statutory definitions, the Commissioner was burdened with the problems of interpretation and implementation of these provisions and was often unable to accommodate worthy organisations because their activities did not fall within the letter of the Act.  The Taxation Laws Amendment Act, No. 30 of 2000 introduced two new concepts of a “public benefit organisation” (PBO) and a “public benefit activity” (PBA).  As required by the Act, the Minister has approved a list of qualifying PBAs which he may expand from time to time by notice in the Gazette.  Since the introduction of the revised tax system for PBOs, Government has continued to adjust the tax system and has amended the legislation to address the needs and problems as they were identified.

Government has also recognised that PBOs are often dependent upon the generosity of the public and accordingly to assist them, donations made to approved organisations conducting certain categories of PBAs may be deducted from the taxable income of the donating taxpayer. The Commissioner must issue the PBO or organisation with a reference number for this purpose.

Many donor organizations require that recipient NPO’s / PBO’s fulfil these requirements before grants applications will be considered. 

You can download the following documents here:

• Tax Exemption Guide for Public Benefit Organisations in South Africa
• Application for exemption from income tax
• Public Benefit Organisation – Written Undertaking