By David Warneke, Director: Tax, BDO South Africa Johannesburg, South Africa- In the first version of the Draft Taxation Laws Amendment Bill of 2014 that was released in July, it was proposed that Public Benefit Organisations (PBOs) that provide assets or funding to other PBOs would have to comply with a prescribed investment regime. In terms of current law such PBOs have to distribute, or incur the obligation to distribute at least 75 per cent of the donations received during the year of assessment for which section 18A receipts were issued, within 12 months of the end of the year of assessment (s18A(2A)(b)). The Commissioner is given the discretion to vary this requirement having regard to the public interest and the purpose for which the PBO wishes to accumulate the funds.
Category: Public Benefit Organisation
The Cape Tax Court interprets the statutory criteria for approval by SARS as a tax-exempt PBO
Author: BDO South Africa The decision of the Cape Town Tax Court in ITC 1872 (2014) 76 SATC 225 brings long-awaited clarity to the interpretation of the statutory criteria that a public benefit organisation (PBO) needs to satisfy in order to qualify for tax exemption in terms of s 10(1)(cN) of the Income Tax Act 58 of 1962, read with the provisions of the Ninth Schedule to the Act.
Donating to Public Benefit Organisations
Public benefit organisations (‘PBOs’) provide invaluable healthcare, education, poverty alleviation, housing, conservation, environmental, cultural and religious services in South Africa. The important role that these organisations play in our society is recognised by the legislature which has provided PBOs with a number of tax advantages.
Proposed amendments to the Public Benefit Organisation provisions
Currently, conduit Public Benefit Organisations (PBOs) (PBOs which do not carry on a Public Benefit Activity listed in Part II of the 9th Schedule, but which provide funds or assets to other approved PBOs) are obliged to distribute or incur an obligation to distribute, to other approved PBOs, at least 75% of the donations received for which a section 18A deductible receipt was issued, within 12 months of the end of the year of assessment in which the donation is received.
Public benefit organisations – lowering the distribution requirement
Author: Nicole Paulsen and Gigi Nyanin (DLACliffeDekkerHofmeyr) On 17 July 2014 the National Treasury (Treasury) released the draft Taxation Laws Amendment Bill (TLAB) which aims to give effect to the various tax proposals announced in the 2014 Budget. One of the proposals relates to the control measures, and more specifically the distribution requirement, prescribed for a defined conduit public benefit organisation (PBO).
Public Benefit Organisations (PBO) – Requirements for approval
Fiscal policy, as manifested in the Income Tax Act No. 58 of 1962 (the Act), is that philanthropy should be encouraged. The Act achieves this objective by providing that, subject to certain criteria being met and subject to limitations, charitable organisations enjoy a very favourable tax regime and taxpayers who make donations to such organisations may deduct the donations for income tax purposes.
An important judgement for public benefit organisations
Author: Ben Strauss (Cliff Dekker Hofmeyer) Fiscal policy, as manifested in the Income Tax Act, No 58 of 1962 (Act), is that philanthropy should be encouraged. The Act achieves this objective by providing that, subject to certain criteria being met and subject to limitations, charitable organisations enjoy a very favourable tax regime and taxpayers who make donations to such organisations may deduct the donations for income tax purposes. To qualify for the favourable dispensation, an organisation must be approved as a public benefit organisation (PBO) by the South African Revenue Service (SARS).
Taxation of public benefit organisations changed
‘Ruling could take parties unaware’ – Piet Nel. JOHANNESBURG – Public benefit organisations (PBOs) should take note of a new binding ruling issued by the South African Revenue Service (Sars), which could result in the loss of their tax exemption on business undertakings or trade activities. Last month, Sars issued a binding general ruling, which aims to provide clarity on the concept “substantially the whole”.
A Conundrum? The VAT Consequences of a PBO Entering into a Joint Venture with a Third Party
Author: Prof Daniel Erasmus (TRM Services) A public benefit organisation (“PBO”) is a nonprofit company with members that includes the following objects as set out in its Memorandum of Incorporation: “… to develop technology and materials in support of such objectives…”. The PBO wants to enter into a Joint Venture arrangement with a company (“the Company”) that is able to contribute the skills and expertise “… to develop technology and materials in support of such objectives…”. But it only wants to do so if there are no adverse value-added tax (“VAT”) consequences.
Western Cape SARS Stakeholder Meeting: Minutes
On Wednesday the 20th of March, SAICA and SAIT had a meeting with the SARS to discuss operational issues raised by our Western Cape members. The meeting was very interactive and valuable insights were obtained from both the bodies and SARS.