New requirements for section 18A receipts issued by public benefit organisations

Section 18A of the Income Tax Act allows approved public benefit organisations (PBOs) to issue receipts to donors for donations received. The receipt issued by a PBO allows the donor to receive a tax deduction for such expenditure, subject to the limitations in section 18A.On 24 February 2023, a notice was issued by the South African Revenue Service (SARS) pertaining to the validity requirements of issuing a receipt in terms of section 18A of the Income Tax Act. In terms of the notice, it is required that with effect from 1 March 2023, all receipts issued in terms of section 18A contain the following information (new requirements are indicated in bold):

• the reference number of the PBO or other approved entity issued by SARS for the purposes of section 18A;
• the date of the receipt of the donation;
• the name of the PBO or other approved entity which received the donation, together with an address to which enquiries may be directed in connection to such donation;
• the name and address of the donor;
• the amount of the donation or the nature of the donation (if not made in cash);
• a certification to the effect that the receipt is issued for the purposes of section 18A, and that the donation has been or will be used exclusively for the object of the PBO or approved entity for the carrying on of the relevant PBA;
• donor nature of person (natural person, company, trust, etc.);
• donor identification type and country of issue (in case of a natural person);
• identification or registration number of the donor;
• tax reference number of the donor (if available);
• contact number of the donor;
• electronic mail address of the donor;
• a unique receipt number; and
• trading name of the donor (if different from the registered name).

In addition to the notice issued, SARS published the IT3(d) Business Requirement Specification document on its webpage setting out the manner in which section 18A third-party information should be submitted to SARS by PBOs.

It is therefore important that PBOs 1) update the information contained in their donor database and/or 2) change the format of the receipts issued in terms of section 18A to ensure compliance with the new third-party data reporting requirements.

Donors should ensure that any donations made on or after 1 March 2023 complies with the new list of requirements to ensure that they enjoy the tax deduction in terms of section 18A.

For more information on the new requirements of section 18A receipts, please contact Jan Louis Koen on 021 840 1600 or janlouis@asl.co.za.