close
Share with your friends

South Africa: Proposal concerning approval process for tax-exempt applications

South Africa: Proposal concerning approval process

A pending legislative proposal would affect the retroactive application of approvals of tax-exempt status for certain public benefit organisations.

1000

Related content

Currently, organisations that conduct certain prescribed activities for the benefit of the public can apply to the South African Revenue Service (SARS) for approval to be treated as a tax-exempt public benefit organization.

Once approved, the organisation does not need to pay income tax on its receipts and accruals. Additionally, such an organisation may also apply to SARS to enable it to issue special receipts, in a prescribed format, for donations made that fund its activities. Donors that receive these special receipts from the organisation may claim a tax deduction for their donations. Annually, the organisation will require certificates issued by a registered auditor that demonstrate that it is using the donations received for its activities.

The current process in applying for public benefit status is lengthy and often takes more than one financial year. When approval is granted, previously taxed receipts and accruals become exempt from tax, and SARS must refund these amounts with interest retroactively (from the date when the organisation would have qualified for public benefit organisation status).

Pending legislation provides that approvals would be subject to a more limited SARS discretion. Furthermore such approvals would only be possible if the organisation has met all the requirements for tax-exempt status during the relevant periods as well as its obligations relating to filing of returns and payments of taxes.

Read a November 2019 report [PDF 414 KB] prepared by the KPMG member firm in South Africa

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Want to do business with KPMG?

 

loading image Request for proposal