Things to know about Section 18A donations

In this article we list the basics of what you should know for Section 18A donations and the  relevant laws.

The reader is advised to also read our other articles published in 2021: “Non-profit organisation-related law and benefits in South Africa”

Applicable laws for this article:

Non-Profit Organisations Act 71 of 1997, as amended

Income Tax Act 52 of 1962, as amended – Section 18A

The objects of this Non-Profit Organisations Act are to encourage and support non-profit organisations in their contribution to meeting the diverse needs of the population of the Republic by:

(a) creating an environment in which non-profit organisations can flourish;
(b) establishing an administrative and regulatory framework within which non-profit organisations can conduct their affairs;
(c) encouraging non-profit organisations to maintain adequate standards of governance, transparency and accountability and to improve those standards;
(d) creating an environment within which the public may have access to information concerning registered non-profit organisations; and
(e) promoting a spirit of co-operation and shared responsibility within government, donors and amongst other interested persons in their dealings with non-profit organisations.

Section 18A(1) and (2) potentially provide a taxpayer with a deduction for donations paid or transferred in good faith to any approved organisation, agency, programme, fund, High Commissioner, office, entity, organisation or department, if the donation is supported by a section 18A receipt issued by that approved organisation, agency, programme, fund, High

Commissioner, office, entity, organisation or department.

Section 18A(2B) and (2C)  refer to an audit certificate. No detailed requirements are prescribed with regards to the information that must be contained on the audit certificate, or from whom the audit certificate must be obtained, with the exception of who must issue it in the case of a department.

What is an audit certificate?

An audit certificate is a physical document, for example, a form, declaration or letter, that provides an opinion on the use of donations for which an approved organisation or department issued section 18A receipts.

Submission of an audit certificate

A person who wilfully and without cause fails or neglects to submit a return or document to SARS, which would include an audit certificate which is required to be submitted, is guilty of an offence and on conviction liable to a fine or imprisonment for a period not exceeding 2 years.

Retention of an audit certificate

The audit certificate, whether in physical or electronic form, is generally required to be kept and retained for 5 years from the date of submission of the income tax return for the year of assessment to which it relates. There are, however, circumstances in which it may be required to be retained for a longer period.

For example, if:

i) an income tax return for a particular year of assessment is not submitted as required, the audit certificate must be retained indefinitely until the obligation to submit a return has been complied with and, once the return has been submitted, for 5 years from the date of submission; or

ii) a person has been notified of or is aware of an audit or investigation by SARS regarding donations received or accrued, the issue of section 18A receipts or the usage of those donations, the audit certificate must be retained until the audit or investigation is concluded or the applicable 5 year period has elapsed, whichever is the later.

Author Craig Tonkin

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