Skip navigation

Tax and BEE Benefits

 
  Free counters!  
BEE  benefits
Any company donating to Bonesa Khanya Project(BKP)- will earn the maximum points in terms of Socio economic development (SED)-for the fact that over 75% of the beneficiaries of BKP are historically disadvantaged black South Africans.
BONESA KHANYA PROJECT(BKP) in terms of the amended codes/new codes of good practice, is a level one B-BBEE Exempted micro enterprise,hence accorded a 135% B-BBEE procurement recognition-the highest EME recognition.
 By increasing the SED portion of the BEE rating Scorecard,the company's overall BEE rating score is increased-hence the company will stand better chances in bidding/tendering selections-due to the prevailing requirements in terms of contract awards/procurement policies, in most Government departments,state owned enterprises and many BEE complying  Big companies in RSA.A company's  marketing & public relation's profile is also greatly enhanced by supporting BKP.
 
 Tax Benefits-


 Introduction



 South African non-profit organizations (NPOs) struggle to encourage philanthropy amongst private individuals and companies. In addressing this problem, Section 18A of the Income Tax Act provides local NPOs with the opportunity to give private individuals and companies a tangible incentive to make donations by making the donation tax deductible, within certain limits.
 
Acquiring public benefit organisation (PBO) status is a difficult task, given that the Act does not define what it means by “public benefit” with any certainty, leaving the onus on the NPO to prove that its work provides a public benefit. However, setting out to prove an organisation’s “benefit to the public” is a worthwhile exercise as it opens up the NPO to a wider pool of donors, who are more likely to make a donation because it makes financial sense.
 
How the Acts works
 
Prior to 15 July 2001, donations were only deductible where a taxpayer made a donation to an educational body that could issue a tax certificate in accordance with section 18A of the Income Tax Act. In reviewing the rules relating to tax exempt bodies in South Africa, Government made the decision that the deduction of donations for tax purposes should be broadened to some degree.
 
In terms of section 18A, a deduction (subject to a limit) is allowed in respect of the sum of bona fide donations in cash or kind made by a taxpayer, during the year of assessment, to any –
 
Public benefit organisation approved by the Commissioner under section 30; or
Institution, board or body contemplated in section 10(1) (cA) (i); or
 
The Government or any provincial administration or local authority as contemplated in section 10(1)(a) or (b) to be used for purposes of any activity contemplated in Part II of the Ninth Schedule;
which carries on any public benefit activity (determined by the Minister) in the Republic and which complies with the requirements of subsection (1C) or any additional requirements prescribed by the Minister;  as does not exceed 5% of the taxable income of the taxpayer before the deduction under this section and section 18 (medical).
The public benefit activities which the Minister has approved for section 18A deduction purposes are set out in Part II of the 9th Schedule to the Income Tax Act.
 
This section makes a claim for a deduction subject to the submission of a receipt as prescribed and also provides for the valuation of any donation of property in kind.
 
In summary, section 18A entitles a taxpayer (individual, company, close corporation or trust) to deduct annually donations to certain public benefit organizations not exceeding 5% of taxable income. The “taxable income” for this purpose is the donors’ taxable income as calculated before allowing the deduction for medical expenses and the deduction of the donation.
 
Examples of Incentives to Donors
 
An individual with an annual taxable income of R280 000 can donate a maximum of R14 000 to a S18A organisation and claim this donation as a deduction on his personal income tax return. This translates to an effective out-of-pocket expense of R8 480 or 60% of the amount donated.
 
A company with an annual taxable income of R1000 000 can donate a maximum of R50 000 to a S18A organisation and claim this donation as a deduction on the company’s corporate tax return. This translates to an effective out-of-pocket expense of R35 000 or 70% of the amount donated

 
.