Requirements

S18A Certificate Requirements

S18A Certificate Requirements in South Africa: A Complete Guide

For South African donors and non-profit organisations, understanding S18A Certificate Requirements is essential for unlocking tax-deductible donations and maintaining SARS compliance. Section 18A of the Income Tax Act allows qualifying organisations to issue tax certificates so that donors can claim deductions for bona fide donations.

Below is a clear, fact-based guide drawn from SARS and other authoritative sources. All requirements and rules cited are based on real, verifiable information.

What Is an S18A Certificate?

An S18A certificate is a tax certificate issued by an approved organisation in terms of section 18A of the Income Tax Act 58 of 1962, allowing donors to claim a tax deduction for qualifying donations from their taxable income in South Africa.

According to the South African Revenue Service (SARS), only organisations that have been formally approved under section 18A may issue these receipts for tax purposes, and not all Public Benefit Organisations (PBOs) automatically qualify for S18A status (SARS – Tax Exempt Institutions).

Who May Issue S18A Certificates?

Only certain approved entities may issue S18A certificates. SARS lists the following as eligible, provided they are formally approved under section 18A (SARS – Tax Exempt Institutions; SARS – Donations and Section 18A):

  • Public Benefit Organisations (PBOs) carrying out qualifying public benefit activities listed in Part II of the Ninth Schedule to the Income Tax Act.
  • Certain institutions, boards or bodies established by law.
  • Certain UN agencies and similar organisations designated by the Minister of Finance.
  • Specific government departments or local authorities where they carry out qualifying activities.

Importantly:

  • Being a registered Non-Profit Organisation (NPO) under the NPO Act does not automatically mean S18A approval.
  • Being an approved PBO under section 30 also does not, by itself, guarantee section 18A approval. The organisation must have separate S18A approval from SARS (SARS – Tax Exempt Institutions).

Core S18A Certificate Requirements

SARS has set specific content requirements for valid S18A receipts. These were formalised in Government Gazette No. 48104 (13 February 2023) and subsequent guidance (SARS – Donations and Section 18A).

To be valid for a tax deduction, an S18A certificate must contain at least:

  1. Details of the issuing organisation
    • Name of the organisation.
    • Address of the organisation.
    • The organisation’s approved S18A reference number as issued by SARS.
  2. Details of the donor
    • Full name of the donor (individual or entity).
    • Address of the donor.
    • In practice, SARS also encourages use of an identifying number such as income tax reference number or ID/registration number to strengthen the link between the donor and the receipt (see guidance in SARS – Donations and Section 18A).
  3. Details of the donation
    • Date of the donation or the period where recurring donations apply.
    • Amount of the donation if in cash.
    • A clear description of any donated property in kind, and the value thereof.
    • A statement confirming that:
      • The donation will be used exclusively for the public benefit activities approved under section 18A; and
      • The donor received no direct or indirect benefit in return for the donation.

SARS emphasises that a valid section 18A receipt must enable it “to satisfy itself that the receipt is issued by a section 18A-approved organisation and that the donation meets the legislative requirements” (SARS – Donations and Section 18A).

When Can a Donation Qualify for Section 18A?

For a donation to qualify for an S18A deduction:

  1. It must be a bona fide donation
    SARS defines a donation as a voluntary, gratuitous disposal of assets or money without any quid pro quo. If the donor receives a material benefit (for example, services, advertising, or goods) in exchange, it does not qualify for deduction (SARS – Donations and Section 18A).

  2. It must be made to an S18A-approved organisation
    The organisation must be approved under section 18A for the specific public benefit activities it performs. Donors are encouraged to verify this status directly with the organisation or SARS (SARS – Tax Exempt Institutions).

  3. The donation must be used for qualifying public benefit activities
    Only donations applied solely to qualifying public benefit activities listed in Part II of the Ninth Schedule (e.g., welfare, education, health care, conservation, land and housing) can support an S18A certificate (SARS – Tax Exempt Institutions).

  4. The donation must be in money or property of value
    Both cash and in-kind donations may qualify, as long as the value can be determined and recorded properly on the S18A certificate (SARS – Donations and Section 18A).

Limits on the Tax Deduction for Donors

For donors, the deduction based on S18A certificates is subject to a cap:

  • The total section 18A deduction in a year is generally limited to 10% of taxable income (excluding certain retirement fund contributions and before the S18A deduction itself) as per SARS guidance on charitable donations (SARS – Donations and Section 18A).

Any excess may, in some cases, be carried forward to the next year of assessment, provided the original S18A documentation is retained (SARS – Donations and Section 18A).

Record-Keeping Requirements

For Donors

Donors must:

  • Keep original S18A certificates for at least five years from the date of submission of the return where the deduction was claimed, in line with general record-keeping rules for tax purposes (SARS – Keeping Records).
  • Make sure each certificate clearly shows:
    • The name and S18A reference number of the organisation.
    • The full donation amount or property value.
    • The date of the donation and the donor details.

Without a valid S18A certificate, SARS may disallow the deduction, even if the donation was made to an approved organisation (SARS – Donations and Section 18A).

For Organisations

S18A-approved organisations must (SARS – Tax Exempt Institutions):

  • Maintain detailed records of all S18A donations received, including donor details, amounts, dates and how the funds were spent on qualifying public benefit activities.
  • Ensure that S18A receipts are only issued where all requirements have been met.
  • Be able to demonstrate to SARS, on request, that donations for which certificates were issued were applied only for the approved section 18A activities.

Failure to keep proper records can place the organisation’s S18A status at risk and can also prejudice donors if SARS disallows deductions.

Obtaining S18A Approval from SARS

Organisations that wish to issue S18A certificates must apply to SARS.

According to SARS’s guidance for tax exempt institutions (SARS – Tax Exempt Institutions):

  1. Register as a PBO (if applicable)
    Many organisations first apply for approval as a Public Benefit Organisation under section 30. This involves submitting the required founding documents, forms and supporting information to SARS.

  2. Apply specifically for section 18A approval

    • The application must demonstrate that the organisation conducts one or more qualifying public benefit activities listed in Part II of the Ninth Schedule.
    • The governing document (e.g., trust deed, memorandum of incorporation, constitution) must contain clauses required by SARS for section 18A and section 30 compliance, including restrictions on use of funds and distribution of assets on winding up.
  3. Receive an approval letter and reference number
    If approved, SARS issues:

    • A section 18A approval letter, and
    • An S18A reference number that must appear on all tax certificates issued.

Organisations and advisors can consult guidance such as SARS’s “Guide for Tax Exempt Institutions” for a more detailed breakdown of the approval process and compliance duties (SARS – Tax Exempt Institutions).

Compliance Risks and Misuse of S18A Certificates

SARS warns that misuse or incorrect issuing of S18A receipts can have serious consequences:

  • An organisation’s tax exempt and S18A approval can be withdrawn if it:
    • Issues certificates for non-qualifying donations,
    • Fails to apply donations solely to qualifying public benefit activities,
    • Or does not meet the legislative conditions (SARS – Tax Exempt Institutions).
  • Donors may face:
    • Disallowed deductions for invalid receipts,
    • Potential penalties and interest if SARS finds that deductions were claimed without proper basis (SARS – Donations and Section 18A).

Organisations are therefore encouraged to seek professional tax advice and ensure that all S18A certificate requirements are rigorously met before issuing any receipts.

Verifying S18A Status and Certificates

Before claiming a deduction or issuing receipts:

  • Donors should:
    • Ask the organisation for proof of S18A approval (e.g., the SARS approval letter).
    • Confirm that the S18A reference number appears on the certificate and matches SARS’s issued number (SARS – Donations and Section 18A).
  • Organisations should:
    • Check that their approval has not lapsed or been withdrawn.
    • Ensure all new receipts comply with the latest SARS requirements, including any changes announced in Government Gazettes or SARS notices (SARS – Tax Exempt Institutions).

How S18A Certificate Requirements Benefit Donors and NPOs

When properly understood and applied, the S18A Certificate Requirements create a clear framework that benefits both donors and qualifying organisations:

  • Donors gain:
    • A legally recognised, documented way to claim tax relief for qualifying donations.
    • Greater confidence that their contributions support genuine public benefit activities.
  • Organisations gain:
    • A powerful incentive for fundraising: tax-deductible donations.
    • A structured compliance framework that strengthens governance and transparency.

By carefully following the SARS rules on S18A approval, content of certificates, and record-keeping, South African NPOs and PBOs can responsibly leverage section 18A to maximise impact, while donors can safely claim their allowable tax deductions.

For further detail, always refer directly to SARS’s official material on tax exempt institutions and donations and section 18A available on the SARS website (SARS – Tax Exempt Institutions; SARS – Donations and Section 18A).

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