Does schools (primary/nursery/kindergarten)need to be registered for income tax? If so, are they automatically exempt for income so we can therefore apply to the TEU for exemption?
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
We are not sure if the primary/nursery/kindergarten is a public school - we assume so.
Paragraph 7.4.1.1 (of SARS’s Tax Exemption Guide for Public Benefit Organisations in South Africa) explains it very well and we copy that below:
“Public schools, as defined in terms of the SA Schools Act, 1996, fall under the jurisdiction of provincial legislation, are funded by the State and established in terms of the relevant statute law. A public school is a juristic person but is not established, formed or incorporated as a company, trust or association of persons and it is also not brought into existence in terms of a founding document such as a constitution, memorandum of association or trust deed. It is therefore not a PBO and can therefore not be approved as such in terms of section 30 of the Act. However, being established under law, it may qualify for exemption from income tax in terms of section 10(1)(cA)(i) of the Act.”
The form E1 (Application for exemption from income tax in terms of section 10(1)…) is used for the application and is submitted to the tax exempt unit. They will register the school for tax purposes. It is not, for tax purposes, necessary to register as an NPO.
The tax exempt unit can be contacted at teu@sars.gov.za and you can contact them regarding the information that they require in support of the application.