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GAYE Contributions as a Deduction
- 07 August 2024
- Individuals Tax
- The Tax Faculty Tax Specialist
This article is based on tax law for the year ending 28 February 2025.
1. The Problem / Facts
A South African taxpayer who works abroad, makes contributions towards Give As You Earn (GAYE). SARS did not allow the GAYE contributions as a deduction. Is GAYE tax deductible in South Africa?
2. Applicable Law
ITA 58 of 1962, Section 18A
3. Application of the Law to the Facts
The Give As You Earn (GAYE) scheme, prevalent in the UK, allows employees to make charitable donations directly from their salaries before tax is deducted. Section 18A of the Income Tax Act, 1962 contains the criteria to be met for charitable donations to be considered tax-deductible in South Africa. Specifically, section 18A provides for deductions in respect of donations made to certain public benefit organizations (PBOs) within South Africa.
The key requirements are:
- The donation must be made to a PBO approved by the Commissioner.
- The taxpayer must receive a receipt from the PBO indicating that the donation qualifies under Section 18A.
- The deduction is generally limited to 10% of the taxpayer's taxable income (before the deduction of medical expenses).
Given that the GAYE scheme is based in the UK and the donations are likely going to UK-based charities, the contributions made through the GAYE scheme would not meet the criteria set out in Section 18A for tax deductibility in South Africa. This is likely why SARS has not allowed the GAYE portion as a deductible expense.