What is a Non-Profit Organisation?
A non-profit organisation is defined as a trust, company or other association of persons:
(a) established for a public benefit purpose, and
(b) the income and property of which are not distributable to its members or office bearers except as reasonable compensation for services rendered.
Additionally, a NPO is an organisation that meets the requirements prescribed in section 30 of the Income Tax Act (the IT Act) and which may apply for approval to the Commissioner of the South African Revenue Service (the Commissioner), to enjoy the benefit of certain tax concessions.
Any organisation that is not for profit and is not part of government can apply for registration as follows:
• Non-governmental organisations (NGO)
• Community-based organisations (CBO)
• Faith-based organisations (FBO).
• Organisations that have registered as Section 21 companies under the Company Act 61 of 1973.
• Trusts that have registered with Master of the Supreme Court under the Trust Property Control Act 57 of 1988.
• Any other voluntary association that is not for profit.
The process takes about two months and all applications are processed in Pretoria.
The South African Government has recognised that certain organisations are dependent upon the generosity of the public and to encourage that generosity has provided a tax
deduction for certain donations made by taxpayers.
The eligibility to issue tax deductible receipts is dependent on section 18A approval granted by the Tax Exemption Unit (within SARS), and is restricted to specific approved organisations which use the donations to fund specific approved Public Benefit Activities.