Income Tax - Single Section 18A Receipt

Income Tax - Single Section 18A Receipt

• 23 July 2024
• Accounting
• IAC - The Professional

Background

Section 18A(1) allows a donor taxpayer to deduct the sum of any bona fide donations actually paid or transferred to a section18A-approved organisation during a year of assessment. The deduction of the sum of bona fide donations made during the year of assessment may not exceed 10% of the taxpayer’s income.

Section 18A(2)(a) prescribes the mandatory information that must appear on a section 18A receipt for the receipt to be valid. Any claim for a deduction in the determination of taxable income for the sum of any bona fide donations by a donor taxpayer will be allowed only if supported by a section 18A receipt issued by the section 18A-approved organisation containing the mandatory information.

Ruling

BGR 70 confirmed that a single section 18A receipt, complying with the mandatory information listed in section 18A(2)(a) issued to a donor taxpayer for the sum of bona fide donations actually paid or transferred by that donor taxpayer to a section 18A approved organisation during a year of assessment, is acceptable.

The sum of the multiple bona fide donations reflected in separate section 18A receipts must be the same amount as the sum of bona fide donations reflected in a single section 18A receipt.

The single section 18A receipt issued by a section 18Aapproved organisation to a donor taxpayer must contain the mandatory information and a breakdown listing the following information of each bona fide donation making up the sum of the multiple bona fide donations actually paid or transferred by that donor taxpayer during the year of assessment:

• The date of receipt of each bona fide donation.
• The amount of each bona fide donation if the donation was made in cash
• The nature and value of each bona fide donation if the donation is a non-cash donation The above will ensure substantial compliance with the requirements under section 18A.

Validity

BGR 70 applies from date of issue (i.e. 16 May 2024) until it is withdrawn, amended or the relevant legislation is amended.

FAQs

1. What is a Section 18A receipt in South Africa?

A Section 18A receipt is an official document issued by an approved Public Benefit Organisation (PBO) or Non-Profit Organisation (NPO) that allows donors to claim a tax deduction for qualifying donations.

2. Why has SARS introduced a single Section 18A receipt?

SARS introduced the single Section 18A receipt to standardise the format, reduce errors, and ensure compliance with tax legislation for donations made to approved organisations.

3. Who can issue a Section 18A receipt?

Only organisations approved by SARS as Section 18A-approved PBOs or institutions may issue a valid Section 18A receipt to donors.

4. What information must be included on a Section 18A receipt?

A valid receipt must include: the donor’s details, organisation’s details, PBO reference number, donation amount, date, and a clear statement confirming the donation qualifies under Section 18A.

5. Can I claim a tax deduction without a Section 18A receipt?

No. SARS requires an official Section 18A receipt as proof of donation before allowing a deduction against taxable income.

6. Is there a limit on the deduction for Section 18A donations?

Yes. Donations are deductible up to 10% of taxable income. Any excess can be carried forward to the following year of assessment.

7. Do cash and non-cash donations both qualify for Section 18A receipts?

Yes, both monetary donations and donations in kind (like goods or property) may qualify, provided they meet SARS’s requirements and are properly receipted.

8. Can I use one receipt for multiple donations in a year?

Yes. Under the single Section 18A receipt system, an organisation can issue one consolidated receipt covering all donations made during the year, instead of multiple receipts.

9. How does the new single receipt system benefit donors?

It simplifies record-keeping, ensures SARS compliance, and makes it easier for donors to claim deductions during their tax return submission.

10. Should donors or organisations seek professional tax advice on Section 18A receipts?

Yes. Since incorrect receipts can lead to disallowed deductions or compliance issues, both donors and organisations should consult a tax practitioner to ensure proper handling.

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