Understanding the complexities of tax can be really mind-boggling. We’ve made it easier with these fast facts about donating income in South Africa.
1) Tax deductions can only be claimed if you donate to a registered PBO. Donations to entities that are registered as Not for Profit Companies (NPC’s) or Not for Profit Organisations (NPO’s) may count for BEE or social corporate responsibility purposes, however if these entities are not registered with SARS as a PBO, the donor will not be entitled to claim tax deduction.
2) The amount deducted from your taxable income is limited to 10% of your taxable income. The amount of donations exceeding 10% of the taxable income is treated as a donation which is made in the following year of assessment.
3) Not only will you receive a tax deduction from your income tax for the donation, but you will also not be subject to donations tax. Donations to PBO’s are exempt from donations tax. Donations tax applies to a gratuitous disposal more than R100 000 per annum, by a taxpayer and is subject to 20 % donations tax.
4) To claim your tax benefit, you will need to submit a Section 18A Tax Certificate from the charity that you have donated to.
Generosity is the new marketing. Donations to your favourite charity not only have tax benefits but can also yield various company and brand benefits too. Spin-offs include positive publicity, brand loyalty, reputation and even increased sales due to the ‘good company’ association.
Zip Zap is registered with SARS as a bona fide public benefit organisation.