GrapeVine SA

22/04/2024

Now that we’ve busted the myths around tax and NGO’s in SA, we’d like to share a list of helpful resources for NGO’s when it comes to tax. Have a look at the list below to find valuable guides to make sure your organisation handles its’ tax obligations right.

LAPD-IT-G16 Basic Guide to Income Tax for Public Benefit Organisations - (Issue 2) - 19 September 2016 (https://www.sars.gov.za/wp-content/uploads/Ops/Guides/LAPD-IT-G16-Basic-Guide-to-Income-Tax-for-Public-Benefit-Organisations.pdf)
LAPD-IT-G 17 Basic Guide to Section 18A approval – (Issue 3) – 17 March 2020 (https://www.sars.gov.za/wp-content/uploads/Ops/Guides/Legal-Pub-Guide-IT17-Basic-Guide-to-Section-18A-Approval.pdf)
IT-AE-44-G02 How to register on e-Filing and complete the IT12EI return for tax exempt organisations (https://www.sars.gov.za/wp-content/uploads/Ops/Guides/IT-AE-44-G02-How-to-Register-for-eFiling-and-Complete-the-IT12EI-Return-for-Tax-Exempt-Organisations-External-Guide.pdf)
LAPD – ITG – 26 Tax Exemption Guide for Public Benefit Organisations in South Africa (Issue 5) - 26 January 2017 (https://www.sars.gov.za/wp-content/uploads/Ops/Guides/Legal-Pub-Guide-IT26-Tax-Exemption-Guide-for-Public-Benefit-Organisations-in-South-Africa.pdf)
VAT 414 - Guide for Associations Not for Gain and Welfare Organisations – 10 March 2016 (https://www.sars.gov.za/wp-content/uploads/Ops/Guides/LAPD-VAT-G07-VAT-414-Guide-for-Associations-not-for-Gain-and-Welfare-Organisations.pdf)

We’d also like to give a shout out to Hashtag Nonprofit and Ziyo for their helpful article that we used to develop the series! If you’d like to read it, check it out below:

https://hashtagnonprofit.org/resources/finance/top-5-tax-myth-s-financial-reporting-obligations-for-non-profit-entities

15/04/2024

Another Monday, another tax myth tackled!

Today’s myth is that PBO’s and NGO’s are exempt from paying VAT.

FACT: No VAT exemption exists for any entity, including non-profits and PBOs. Specific activities like crèche, school, and tertiary education fees, finance charges, and public road transport fees are VAT exempt. The cost of these services excludes VAT, and any VAT included in related expenditure cannot be reclaimed from SARS.

09/04/2024

Important information.
Please take note.

Thanks for this, Ziyo.

Submissions to SARS by section18A approved organisations – the time has come!
SARS has now announced that the Third Party Data Annual Submissions process (for the period 1 March 2023 – 29 February 2024) will open on 1 April 2024 and close on 31 May 2024.
Are non-profit organisations affected and, if so, which ones?
SARS requires approved section 18A organisations to complete and file the new IT3(d) returns with information on:
• the donors to whom section 18A receipts have been issued; and
• the relevant donation amounts.
Why is this happening?
This requirement has been put in place because various abuses relating to tax-deductible donations have arisen in the past, including:
• misuse by taxpayers of the public benefit organisation’s (“PBO’s”) approval reference number; and
• claiming of a tax deduction against section 18A receipts when no donation had actually been made, when the PBO did not exist or when the entity was not approved as a PBO that could issue section 18A receipts.
The data collected will enable SARS to confirm whether a person reporting a section18A donation on their tax return has filed the correct information and will therefore assist SARS in determining the taxpayer’s tax liability. If this data is not uploaded by the recipient (beneficiary) organisation, it is likely that the taxpayer will not be able to claim the tax deduction.
What is the submission requirement?
Third-party returns must be filed with SARS once a year, after the end of the individual year of assessment (note – not the organisation’s financial year end), giving details of donations made in that year by South African taxpayers to whom a section 18A receipt was issued. These new IT3(d) returns will be submitted to SARS using a submission channel related to the size of the submission.
What information is required on the IT3(d) return?
The information required (mostly drawn from the updated section 18A receipt format that we have previously advised you of) includes:
• Beneficiary’s physical and postal address details
• Donor’s:
o Entity type
o Surname/initial or registered name
o Trading name (if applicable)
o Income taxpayer reference number
o Identification type
o ID number (for individuals)
o Passport number / country
o Cell number
o Contact email address
• Nature of the donation (cash or property-in-kind)
• Rand value (where cash)
• Date of payment / transfer of property

What are the next steps?
Up to 20 records can be submitted via e-filing; at the next level, up to 50 000 records can be submitted electronically via a file transfer protocol.
For our tax compliance clients, this means that, in order to prepare the submission, we will need all section 18A receipts for the tax period ended 29 February 2024. For other organisations, please request assistance from your tax practitioners or users of your e-filing profile.

With best wishes from the Ziyo team,

08/04/2024

Another myth bites the dust!

Today’s myth is that once you have PBO approval, you’ll always have it.

FACT: PBOs must file annual tax returns, appoint a tax representative, and maintain updated registered details with SARS. Non-compliance may lead to SARS withdrawing PBO approval, unless corrective actions are taken.

Make sure you are compliant to reap these benefits.

03/04/2024

We did a quick search on Google to find out what the average Open Rate of Non-Profit emails are.

Nonprofit Tech for Good stated the following:

"Nonprofits have an average open rate of 28.59% and an average click rate of 3.29%." (https://neonone.com/resources/nonprofit-email-report/)

CauseVox quotes Mailchimp:
“The average open rate for nonprofit emails is 25.96%, compared to the universal email open rate of 6%…”
They also mentioned that the best time for nonprofits to send a newsletter is on Mondays at 6:00am. Do you agree?
What is your NPOs newsletter Open Rate and do you have any tips to share with us?

Here are 10 tips that might help you improve your next email fundraising campaign:

1️. Write attention-grabbing subject lines that invite donors to open the mail
2️. Don't overlook the preview text - it's your secondary chance to motivate readers.
3️. Test the effectiveness of text-only emails - they may surprise you!
4️. Vary the “sender” to boost open rates and engagement.
5️. Tell compelling stories that resonate emotionally with donors.
6️. Experiment with different email lengths and measure their impact on giving.
7️. Be direct in your fundraising asks - donors appreciate clarity and purpose.
8️. Ensure a consistent look and feel from email to landing page to minimize friction and confusion.
9️. Create clear and compelling calls to action that prompt immediate action.
10. Always be testing. Use A/B testing to refine your email strategy and maximize results.

(What is A/B testing? A/B testing (also called split testing) is when you compare two versions of a web page or newsletter to figure out the better performing variation.)

02/04/2024

Let’s start the week strong with another tax myth busted!

Today’s myth is that PBO’s can’t make, or are restricted from making money from trade activities.

FACT: Income generated from trading unrelated to the entity’s public benefit activities (including all rental income) is taxable after taking account of the tax exempt portion (the basic exemption of R200 000 or 5% of gross annual receipts, whichever is greater) and the expenditure related to the generation of that income.

QUESTION: How does your organisation generate income? Social Enterprise is one of the strongest tools in any NGO’s box in order to generate income for themselves. Perhaps you have a garden that you can sell veggies from, or parking spaces that you could rent out. However you choose to generate an income, you can connect with people who are after your goods and services on the GrapeVineSA Directory. Let’s chat and get your organisation signed up!

29/03/2024

May your Easter weekend be filled with joy, happiness, and new memories shared with friends and family.

27/03/2024

Why are NPOs are Crucial for South Africa's Growth and Wellbeing:

Filling Service Gaps: NPOs provide essential healthcare, education, and disaster relief that government programs might not fully cover.

Mobilizing Resources: NPOs efficiently gather volunteers and resources to tackle social challenges and drive community development projects.

Boosting the Economy: NPOs create jobs and foster innovation across various sectors, contributing to economic growth.

Advocacy & Change: NPOs champion social change, fight for human rights, and promote environmental conservation, paving the way for a more just and sustainable society.

25/03/2024

It's Monday, so we’re back with another Tax Tip!

Question: Does your organisation have S18A approval?

Our second myth is that PBO approval automatically equals S18A approval.

FACT: Not all PBOs are granted Section 18A status by SARS.

Only approved PBOs that carry out specific public benefit activities and have a confirming letter from SARS may issue a section 18A receipt for a “bona fide donation”.

What is a bona fide donation? A bona fide donation is a genuine gift freely given out of generosity. It comes with no strings attached and offers no advantage or reward for the donor.

22/03/2024

1. Eden on the Bay, Melkbos
2. Camphill Village, West Coast
3. Fisantekraal, Durbanville
4. SARDA, Constantia

21/03/2024

Happy Human Rights Day, South Africa! Today let's delve into the essence of rights and responsibilities. All children are endowed with rights within our constitution, however, with these rights, come great responsibilities.

Children have the RIGHT to make mistakes but the RESPONSIBILITY to learn from these mistakes and grow into responsible individuals.

Children have the RIGHT to be well-fed and nurtured, and the RESPONSIBILITY of not wasting food, understanding the value of resources.

Every child has the RIGHT to play, relax, and engage in various activities and the RESPONSIBILITY of inclusivity. Every child should feel welcomed and included in games and activities.

All children have the RIGHT to voice their opinion, and the RESPONSIBILITY to listen to and respect the opinions of others.

Every child has the RIGHT to a good education, and the RESPONSIBILITY to do their best at school.

19/03/2024

FACT: All legal entities, including non-profit organizations, must register as income taxpayers with SARS, obtain an income tax number, and file an annual tax return.