FAQ – Is a public benefit organisation exempt from all taxes?

No, only from Income Tax. The PBO exemption is only in respect of Income Tax in terms of section 10(1) of the Income Tax Act and may include other taxes and duties, which will be contained in the approval letter.

This could include: Donations Tax; Estate Duty. Skills Development Levy (only for certain approved public benefit activities). The PBO, as employer, may be liable to register for payroll taxes such as Pay-As-You-Earn (PAYE) and Unemployment Insurance Fund (UIF) depending on the income threshold.

Where an employer grants a benefit to an employee as a reward for services rendered, it constitutes a taxable benefit. The nature of the taxable benefit and the cash equivalent of the value must be reflected on the Employee Income Tax Certificate [IRP5/IT3(a)]

Where an employer grants an employee an allowance, the allowance is subject to the deduction of employees’ tax.

Exemption from Value-Added Tax (VAT) must be applied for separately at a SARS branch. Transfer Duty exemption must be applied for at a SARS branch.