Tax exemption, and the receipts your donors ask for
An NPO number does not exempt you from income tax and does not let you issue a receipt a donor can claim. Both come from the SARS Tax Exemption Unit, and most applications come back because the founding document does not say what section 30 requires. We fix that first, then lodge one file that asks for both approvals at once.
What actually goes wrong
- The founding document has no dissolution clause.Section 30 requires that remaining assets go to another approved organisation or to government on winding up. Without it the application fails, every time.
- The three office bearers are related.They must be unconnected persons, which excludes spouses and relatives within the third degree, and no one person may control decision-making.
- The activities are described in fundraising language.SARS matches them to the Ninth Schedule lists. “Uplifting the community” is not an activity in Part I.
- 18A is assumed.Part II is narrower than Part I, and organisations promise donors deductible receipts they are not approved to issue.
- Receipts issued on the old template.Since March 2023 SARS requires donor identification details, a unique receipt number and more. Old receipts cost the donor the deduction.
What you get for R1 490
- Founding document reviewYour memorandum of incorporation, constitution or trust deed checked against section 30, with the amendments drafted where it falls short.
- The EI1 completedWith three unconnected fiduciaries, a nominated public officer and the objects stated the way SARS reads them.
- Activities matched to the Ninth SchedulePart I for the exemption, and Part II where you qualify for section 18A, described in the Schedule’s own language.
- Section 18A requested in the same fileWhere your activities qualify, with the explanation of how they are carried on that SARS asks for.
- The supporting pack assembledRegistration documents, certified identity documents, the bank letter, financial statements and proof of address, with the certification list.
- Lodged and followedSubmitted to the Tax Exemption Unit and followed up until the approval letter and reference numbers come back.
- A compliant 18A receipt templateWith every field SARS now requires, plus a note on the IT3(d) deadlines of 31 May and 31 October and the annual IT12EI return.
How it works
- 1Order and send the founding documentPlus what the organisation actually does and who the office bearers are.
- 2We review and prepareWithin five working days, with any amendments you need to adopt first.
- 3You sign, we lodge and follow upAnd send you the receipt template and the reporting dates once approval comes through.
Not sure this is the right one for you? Ask us first and you get a written answer within one business day.
What we will need from you
- The founding document: memorandum of incorporation with the CoR 14.1 and CoR 14.3, a signed constitution, or the trust deed with the Master’s letters of authority
- Certified identity documents of the three fiduciaries and the public officer
- A bank letter or statement less than three months old
- Financial statements if the organisation is more than a year old
- A description of what you actually do, with examples of the work and who benefits
- Proof of address for the organisation
Frequently asked questions
How long does SARS take?
SARS publishes no service standard for exemption applications, and the Tax Exemption Unit works through a queue. We prepare and lodge within five working days of receiving your documents, then follow up on your behalf. What we can control is that the file is complete, because an incomplete application goes to the back of the queue.
What if our constitution does not qualify?
That is the usual position, and it is included. We check the founding document against section 30 and draft the amendments you need: the objects, the three fiduciaries, the prohibition on distributions and the dissolution clause. You adopt them by resolution and file them with CIPC or the Master, and then we lodge.
Do we get section 18A automatically?
No. Section 18A is a separate approval and only for activities listed in Part II of the Ninth Schedule, which is narrower than Part I. We request it in the same application where you qualify, and tell you plainly if your activities fall outside Part II rather than let you promise donors something you cannot deliver.
Can approval be backdated?
Approval is normally prospective from the date SARS approves it. Retrospective approval can be requested where the organisation can show it met the requirements earlier, and we make that request where the facts support it.
Do we still file tax returns after approval?
Yes. An approved PBO files the IT12EI annual return, and an 18A approved organisation also files the IT3(d) donation data twice a year. Exempt means exempt from tax on qualifying receipts, not from filing.
Related
We prepare and lodge the application under your written authority. The SARS Tax Exemption Unit decides whether to approve the organisation and issues the reference numbers. Sources: the Income Tax Act 58 of 1962 sections 30, 10(1)(cN) and 18A with the Ninth Schedule; SARS’s exemption application checklist, PBO and section 18A pages and the related basic guides; Public Notice 3082 of 24 February 2023 on receipt contents. Information, not tax advice.