Section 18A receipts and PBO rules: what South African non-profits must get right

Two different approvals

It helps to separate two things that are often mixed up.

• PBO status (section 30) exempts the organisation's income from income tax, if it carries on approved public benefit activities.
• Section 18A approval lets the organisation issue receipts that give its donors a tax deduction. It is granted only for activities listed in Part II of the Ninth Schedule to the Income Tax Act, and it can be applied for at the same time as PBO status or later.

You can have PBO status without section 18A approval. You cannot issue a section 18A receipt without approval.

Who may issue a section 18A receipt

An organisation may issue a section 18A receipt only from the date SARS confirms its approval and issues the reference number that must appear on every receipt. A receipt issued before that date, or with the wrong details, is not valid.

What a valid receipt must contain

SARS does not provide receipts. Approved organisations must create their own. Each receipt needs the following.

• The name, address and SARS reference number of the organisation.
• The date the donation was received, and the amount, or the nature and value of a donation that was not in cash.
• A certification that the receipt is issued for the purposes of section 18A and that the donation will be used exclusively for the approved activities.
• The donor's name and address.
• Since 1 March 2023, more donor detail: whether the donor is an individual or a company or another entity, the donor's identification or registration number, their income tax reference number, and contact details.
• A unique receipt number.

Secondary sources report that SARS widened the required content again with effect from 1 March 2026. Confirm the current notice on the SARS website before you update your receipt template. A missing item can stop a donor claiming the deduction, and can be a compliance failure for the organisation.

The receipt must be issued in the year the donation is received.

The annual return and reporting

Every approved exempt organisation must file an IT12EI return every year. It is the return for tax-exempt organisations, and it must be filed even if there is no tax to pay. It must be submitted within 12 months after the organisation's financial year end. SARS uses it to check that you are operating within your approval and to work out tax on any trading income that does not qualify for exemption. It includes the details of the section 18A receipts you issued, and SARS may audit it. Exempt organisations are not provisional taxpayers.

If your organisation is dormant, you still file, and you indicate that on the return.

Records and changes

• Keep your books of account, records and documents for five years from the date of submitting the return.
• Tell SARS about changes to your registered details, such as your address, trustees or directors, within 21 business days.
• Keep the founding document up to date and send SARS a copy of any amendment.

VAT

An approved PBO may be classified by SARS as a welfare organisation under the VAT Act. That places it in the VAT system without meeting the normal registration test and lets it claim input tax even when it has no output tax. A separate SARS letter confirms it. PBOs without that classification may have to register for VAT if their taxable supplies pass the registration threshold, which is now R2.3 million. Read our VAT guide.

Common mistakes

• Issuing receipts before approval, or after approval lapses.
• Leaving out required donor details, or not numbering receipts.
• Issuing a receipt for a payment that is not a donation, such as a fee for services.
• Not filing the IT12EI because "there is nothing to pay".
• Not telling SARS about changes in trustees or directors.
• Mixing restricted grant money with general funds, so reporting does not tie to the books.

This article is general information for South African businesses. It is not tax, legal or financial advice, and it reflects the rules and figures at the date shown above. Tax rules change, so confirm the current position before you act. TBL's practitioners are registered tax practitioners.