Get a tax break for doing good!
Philanthropy doesn’t need to only sit in the realms of Bill Gates, Warren Buffet and other millionaires waking up to the idea of donating a large proportion of their wealth for the greater good. Individuals have the power to build their local neighbourhoods and best of all, you can claim a tax break for your generosity.
Getting your cash back from SARS when you make a charitable donation is as easy as 1,2,3:
- Donate up to 10% of your taxable income a year.
- Make sure you are donating to a registered, SARS approved public benefit organisation (PBO). (Learning In Reach is one such organisation, PBO 930054765. You can check your chosen organisation’s PBO status here: http://www.sars.gov.za/ClientSegments/Businesses/TEO/Pages/Approved-Section18A-PBO’s.aspx)
- Request a section 18A certificate from the organisation concerned as proof of your donation and submit as supporting documentation to SARS on request.
We asked qualified CA (SA) Tee Jay for further clarification on what donations tax is:
In simple terms, donations tax is an appreciation in a form of a reduction in your tax bill. What we ought to understand about this type of tax is that unlike other taxes, it is not a burden but rather a token of appreciation for a job well done. It basically appreciates the role played by donors by ensuring they get something back.
Is there any legislation to be observed and what is the impact of this on donors?
Well, another nice part is the simplicity of legal and administrative requirements. Compared to other taxes, donations tax is easy to understand and implement to enjoy the benefit thereof.
Are they any particular benefits arising from donations tax that one can mention?
Of course, a long list actually but to cover a few, the number one benefit is the tax relief the tax payer gets. Put it this way, you give, you get. It sounds crazy but donations made to PBO do reduce the tax payable.
Apart from the cash backs it is also worth mentioning the social benefit of donations tax.
They say money makes the world go around, but some believe money is not everything. Such people are in it for different reasons like a sense of social responsibility, a sense of well being that comes from helping others, letting the donations do the work on their behalf and long term economic investment.
John lives in Kirstenhof and earns R800 000 per year before tax but after deductions. He wants to make a contribution to the early childhood education of children in his neighbouring community. He believes that this is the best way to build the leaders and labour of tomorrow, indirectly the economy and providing better opportunities for his own children. John can donate up to R80 000 to a registered PBO, such as Learning In Reach, and deduct this from his taxable income. This will reduce his tax payment by approximately R32 400 being the minimum reduction using the lowest tax bracket.
When completing his tax return, John submits the following:
Bear in mind, 28 February 2017 is TOMORROW. Make sure you have made your annual charity donation to maximise your contribution to building a stronger South Africa, while benefiting your maximum tax savings.
To donate to Learning In Reach, make use of one of these convenient payment methods:
Learning In Reach NPC | First National Bank | Branch 250 655 | Account 62614116904
Reference E-mail address
e-mail email@example.com to request your Section 18A tax certificate together with your full name and address.
Tee Jay is a strategic thinker, specialising in accounting, taxation and financial management. A boy from the village and a township shack who qualified as a CA (SA) in 2016 and completed articles from BDO South Africa in Pretoria with the help and financial assistance of various initiatives including Thuthuka and NSFAS. After qualifying as a CA and building good relations in Cape Town, he decided to settle and grow corporate opportunities offered in the mother city. He currently enjoys giving back to his community through financial interventions and serving as a positive role-model to others following in his footsteps.
For more information, consult the following sources: Income Tax act no. 58 1962, Companies Act No.71 of 2008, Parts I and II of the Ninth Schedule.
Feel free to contact Tee Jay with your donations tax queries:
- Cell: 076 181 5634
- Email: firstname.lastname@example.org