We have applied to the Department of Social Development and SARS for classification as a Public Benefit Organisation (PBO) in terms of Section 30 of The Income Tax Act. When granted,it will mean that a receipt issued by Hoedspruit Rotary for a donation given to us will:
- In terms of Section 18A(1)(a) of the Income Tax Act, be tax deductible in the hands of the donor in terms of, and subject to, the limitations prescribed in section 18A of the Act.
- Be exempt from donations tax in terms of Section 56(1)(h) of the Act.
- Be exempt from estate duty in terms of Section 4(h) of The Estate Duties Act.
The limitations in terms of Section 18A……………
A donation given for the following does not qualify for a tax deduction:
- Services rendered.
- An amount paid for attending a fundraising dinner and dance.
- Memorabilia, etc donated to be auctioned to raise funds.
- The amount paid for the successful bid of goods auctioned to raise funds by a charity.
- Amounts paid for raffle or lottery tickets.
- Amounts paid for school fees, entrance fees for school admittance or compulsory school levies.
- Value of free rent, water and electricity provided by a lessor to the lessee which is an approved PBO.
- Payments in respect of debt due by an entity approved in terms of section 18A. An example would be the cost of repairs to a vehicle paid on behalf of the PBO.
As can be seen there is considerable scope for organisations to tax-effectively increase their corporate social responsibility spend.
Please note that we are not tax experts and you are strongly advised to seek professional advice to confirm the exact status of your proposed donation.