Tax Status as a Registered NPO PDF Print E-mail

All organisations, whatever their type, are required by law to register with the South African Revenue Services (SARS). As a registered NPO your organisation will still have to pay income tax on its taxable income. Taxable income is the net profit (the amount left after all your expenses have been deducted) from income-generating activities. Income-generating activities include things like the sale of crafts. Grants and donations are considered as capital and your organisation will not have to pay tax on them.

  • As a registered NPO people or companies who donate money to your organisation will not be able to claim a tax rebate on their donations
  • The only way for your organisation to become exempt (free) from paying income tax is to apply to SARS for registration as a Public Benefit Organisation (PBO). If your application is successful it will become a PBO in terms of Section 10(1)(cN) of the Income Tax Act.
  • In order for donors to get tax exemption on their donations your organisation needs to register as a PBO and also apply for donor deductible status in terms of Section 18A of the Act. If Section 18A status is approved organisations need to give a specific type of receipt to their donors so that they can claim tax exemption.
  • Only certain types of public benefit activities qualify for Section 18A status. These activities are listed in Part 11 of the Ninth Schedule of the Income Tax Act. The Ninth Schedule list can be viewed on the SARS website (go to Taxes, then Tax Exemption Unit), or you can contact the Tax Exemption Unit for the list.
  • While it is still possible to become a PBO without first registering as an NPO, SARS now requires that all newly registered PBOs must obtain NPO registration within 12 months.


Steps in Registering as a Public Benefit Organisation (PBO)

Step One

Collect or request PBO application forms (EI 1 and EI 2) directly from:

The Tax Exemption Unit (TEU)
1250 Pretorius Street
Hatfield
Pretoria
0083

Tel: 012 422 8800
Fax: 012 422 8830
Email: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it


Write to:
The Tax Exemption Unit
PO Box 11955
Hatfield
Pretoria
0001

Alternatively download the two application forms (EI 1 and EI 2) from the SARS website www.sars.gov.za (go to Taxes, then Tax Exemption Unit, then Forms).


Step Two

Fill in both forms. If you are at all unsure of what information is required contact the Tax Exemption Unit directly on 012 422 8800. It is important to fill in the forms correctly otherwise there will be long and unnecessary delays.

The following documents then need to be submitted to the Tax Exemption Unit (see mailing address above):

  • A completed EI 1 and EI 2 form
  • Your annual financial statements
  • A copy of your organisation’s founding document (this will be a Constitution for a Voluntary - Association, a Memorandum and Articles of Association for a Section 21 Company and a Trust Deed for a Trust)


Providing everything is in order, an organisation can expect to receive PBO registration within two months. 

 PBO guidelines can be downloaded from the SARS website.