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Proposal regarding COVID-19 disaster relief funds and deductible donations
- 03 April 2020
- Corporate Tax
- Cliffe Dekker Hofmeyr
Proposal regarding COVID-19 disaster relief funds and deductible donations
According to the Draft EM, given the different types of funding structures and mechanisms that may be used by private donors to assist with COVID-19 relief measures and to ensure that no tax leakage undermines the intended assistance, Government proposes a streamlined special tax dispensation for funds established to assist with COVID-19 relief measures. The streamlined tax treatment is to ensure amongst other things, transparency and accountability of these different types of funding structures.
In light of this, it is proposed that the streamlined special tax treatment for funds established to assist with COVID-19 relief measures should be similar to the current special tax dispensation applicable to PBOs (public benefit organisations) that provide disaster relief as envisaged in sections 10(1)(cN) and 30 of the Act read together with Part I and Part II of the Ninth Schedule to the Act. Pursuant to this, the Draft EM states that it is proposed that, amongst other things, the following apply from 1 April 2020 to 31 July 2020:
- COVID-19 disaster relief funds will on application and approval by the Commissioner for SARS, be deemed to be PBOs as contemplated in sections 10(1)(cN) and 30 of the Act, and subject to the same criteria prescribed to all PBOs in terms of those sections;
- Receipts and accruals of such funds will be exempt from income tax and donations made to such funds will be exempt from donations tax; and
- During the limited period of four months, donations made to a COVID-19 disaster relief fund will qualify for tax deduction in the hands of the donor, subject to the limitation provided in section 18A of the Act.
Please click here to read more.
This article first appeared on cliffedekkerhofmeyr.com.
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