Frequently Asked Questions

What is a Public Benefit Organisation (PBO) service?

The PBO service is the application for tax exemption and section 18A approval. This is a registration process done through the South African Revenue Services Tax Exemption Unit.

What is the benefit?

The benefit is that your organisation is exempt from paying income tax and you may issue donors section 18A certificates which they can then deduct for income tax.

If I have an NPO or NPC, what then?

If you have registered an NPO (Non-profit organisation) through the Department of Social Development, then you still have to apply for PBO status. You are not automatically exempt from income tax.

If you have registered an NPC (Non-profit company) through the Companies Intellectual Property Commission (CIPC), then you still have to apply for PBO status. You are not automatically exempt from income tax.

Do I need to amend my MOI (Memorandum of Incorporation)?

The South African Revenue Services tax exemption unit changed their system whereby they will issue you the approval letter and ask you to amend your founding document at a later stage to include section 30 of the Income tax requirements.

For an NPC, your founding document is your MOI.

For an NPO, your founding document is your constitution.

This can be attended to at a later stage. It is advised to first get the application submitted in order to get a speedy outcome.

What are the prerequisites for PBO registration?

You have to perform PBO activities in order to apply. These are activities for the benefit of the general public.

You must have 3 unconnected directors if you are an NPC, or 3 unconnected board members if you are an NPO.

What is an unconnected person?

It is a person that is not a family member or spouse.

What is the process of application?

Upon processing of your payment, the service is activated and we are ready to start.

You will receive a list of information to compile.

All application forms and templates will be completed on your behalf and emailed to you for signature. Your application will then be submitted.

How long does it take for me to get my PBO approval letter?

Within 21 working days.

Legislation requirements for Nonprofit Organisations

According to Sections 18 and 19 of the Nonprofit Organisations Act of South Africa, No. 71 of 1997, an organisation must produce yearly reports, including annual financial statements, to the NPO Directorate once it has been registered as an NPO.

Legislation requirements for Nonprofit Companies and Private Companies

According to Section 30 of the Companies Act of South Africa, No. 71 of 2008, annual financial statements must be prepared within 6 months after the financial year end.

Why prepare annual financial statements?

Apart from the legislation requirements, annual financial statements indicate the financial position (all assets and liabilities) together with the net operating results (all income and expenses). You cannot steer a ship if you do not know which direction you are going.

Financial institutions may request financial statements for financing applications. In order to complete and submit your income tax return, you need to obtain the figures from the financials.

When must I prepare the first set of financial statements?

From the date of registration of your company, to the year end. Thereafter each year at your company's financial year end.

Do I need to be audited or can I simply have an independent review or compilation?

A public interest score (PI score) will be calculated to ensure you are compliant with the framework selected.

What is an annual return?

In order to keep your company active, The Company Intellectual Property Commission (CIPC) requires that you disclose your total income to them for the particular year in question.

CIPC then calculates a fee based on this income, called an annual duty.

When must I complete the annual return?

The annual return is due every year.

It must be completed and paid before the end of the following month after the registration date of your company.

As example: Company was registered on 10 May 2019 - the annual return is due before the end of June each year.

What will happen if I don't submit the annual return?

CIPC will assume that your company is dormant (not trading).

They will then start the process to deregister your company.

You will be liable for a late penalty fee.

What is a MOI?

The Memorandum of Incorporation is the founding document of your company. It is called the Cor 15.1.

The Company's Intellectual Property Commission (CIPC) issues a welcome letter after your non profit company has been registered, containing amongst the other documents, your company's MOI.

Why must the MOI be amended?

All companies are registered and issued with a standard MOI.

In order to receive tax exemption (PBO), SARS requires that you amend your founding document, to include certain sections of the Income Tax Act.

What does it entail?

The resolution and a new MOI will be prepared on your behalf in order to be compliant to the requirements set out by SARS.

The directors will then sign the documents which have been prepared. This will then be submitted to CIPC.

CIPC will issue a Cor 15.2 document acknowledging the change to the existing MOI.

This will then be submitted to SARS to ensure compliance.

Why do I need a tax clearance certificate?

A tax clearance certificate indicates that your tax affairs are up to date, all returns have been submitted and all outstanding taxes have been paid.

If you are a non profit company and have tax exemption (PBO), most donors would request a tax clearance before making donations to your organisation - especially government institutions and large corporates.

You will receive a certificate in PDF format which you can email to donors or submit for tenders.