Public benefit organisation approval is granted by SARS and exempts a qualifying organisation from income tax on certain receipts. It is applied for after the organisation is established, and it is separate from registering an NPC or an NPO.
Approval is not automatic for non-profits. SARS assesses whether the organisation carries on approved public benefit activities, whether its founding document contains the required provisions, and whether it is genuinely non-profit in its operation.
Business Requirements at a Glance
Approval generally requires the following.
- The organisation must be a non-profit company, a trust, or an association of persons formed in South Africa
- Its sole or principal object must be carrying on one or more approved public benefit activities
- Those activities must be carried on in a non-profit manner with an altruistic or philanthropic intent
- At least three persons who are not connected persons must accept fiduciary responsibility
- The founding document must contain the provisions SARS requires
- No distribution of funds to any person except in furtherance of the objects
- On dissolution, remaining assets must transfer to a similar approved organisation
Registration and Legal Requirements
Approved public benefit activities are listed in a schedule to the Income Tax Act and cover welfare, health care, education, religion, conservation, culture and other categories. Your activities must fall within that schedule.
The requirement that three unconnected persons accept fiduciary responsibility is a governance safeguard, and SARS examines whether they are genuinely unconnected.
Documents and Ownership Information Required
The founding document is where most applications fail. It must contain specific clauses, and a memorandum or trust deed drafted without them has to be amended before approval can be granted.
You will need the founding document, registration certificates, details of the fiduciaries, a description of the activities, and financial information.
Tax, Licence and Compliance Requirements
Approval exempts certain receipts from income tax but does not exempt the organisation from all taxes. Employees taxes still apply where you employ people, and VAT obligations can arise on trading activities.
Section 18A approval is separate and additional. It allows donors to claim a tax deduction for donations, and only certain categories of activity qualify.
Approved organisations must submit annual income tax returns and comply with ongoing conditions. Approval can be withdrawn where conditions are breached.
Process, Deadlines and Ongoing Obligations
Draft the founding document with SARS requirements in mind from the outset. Amending it afterwards is the most common delay in obtaining approval.
If donors expect to claim deductions, establish early whether your activities qualify for section 18A, since not all approved public benefit activities do.
This page is general information and not legal or tax advice. Confirm current requirements, fees and thresholds with the responsible authority, and take professional advice on your specific circumstances.
Frequently Asked Questions
Is PBO approval automatic for non-profits?
No. SARS assesses the activities, the founding document and whether the organisation operates on a genuinely non-profit basis.
What is section 18A?
A separate and additional approval allowing donors to claim a tax deduction. Only certain categories of activity qualify.
What most often delays approval?
The founding document. It must contain specific clauses, and amending it afterwards costs time.
Does approval exempt all taxes?
No. It exempts certain receipts from income tax. Employees taxes and VAT obligations can still apply.
Confirm the current requirements and approved activity list with SARS. This page is general information and not legal or tax advice. Confirm current requirements, fees and thresholds with the responsible authority, and take professional advice on your specific circumstances. Browse all business and compliance requirements.