Tax relief coming for some South Africans

National Treasury has proposed replacing the costly audit certificate requirement for Public Benefit Organisations (PBOs) with a more affordable certificate of examination, giving taxpayers more tax-deductible donation opportunities.

According to Tax Consulting SA, one proposal in the National Treasury’s Tax Administration Laws Amendment Bill (TALAB) could soon make tax compliance more affordable for PBOs.

In particular, it will simplify compliance with the SARS requirement to certify that all section 18A donations for which receipts were issued in a tax year were indeed utilised for public benefit activities.

Simply put, section 18A is the section in the Income Tax Act providing for the tax deductibility of donations made to any approved organisation, agency or department.

Speaking on the Everything Counts podcast, Nicci Courtney-Clark, head of Tax at TaxTim, explained that seduction 18A donations is a great way for South Africans to support charities they care about while potentially lowering their tax bill.

To qualify for tax deductions, the organisation must be a registered PBO with SARS, meaning it operates on a non-profit basis and is tax-exempt.

Eligible charities include well-known organisations like the SPCA and even some neighbourhood watch groups, provided they are set up as PBOs.

Importantly, Courtney-Clark said there is a cap on the deductible amount, as taxpayers can only claim up to 10% of their taxable income for these donations.

To ensure you receive the deduction, it is essential to keep proper documentation. Taxpayers need to request a Section 18A tax certificate from the charity, which should include the PBO number.

This number must be reported on a tax return for verification by SARS. “This is a great way to save for a cause that’s close to your heart and also reduce your tax bill,” Courtney-Clark said.

The changes

The TLAB proposed substituting the current requirement for an “audit certificate” with a “certificate of examination”.

Such a certificate confirms that all donations received or accrued to the PBO in that year of assessment for which section 18A receipts were issued, were only used for benevolent activities.

Accounting professionals say the proposed change will offer much-needed relief to especially smaller non-profits that often struggle with the high cost of annual audits.

The draft amendments, published on 16 August 2025, are open for written comments until 12 September 2025. National Treasury has noted that the move is intended to clarify the meaning of the term “audit certificate”.

Currently, there is some uncertainty in the sector about how this term should be interpreted and whether it should reference terminology contained in the Auditing Profession Act.

Treasury also referred to section 18A of the Income Tax Act in the 2025 Budget Review. This section provides that a claim for a deduction for a donation made to a PBO is only allowed if it is supported by an organisation’s receipt containing specific, prescribed information.

It states that an organisation conducting mixed section 18A and non-section 18A activities must obtain and retain an audit certificate.

The certificate confirms that all donations for which receipts were issued were used solely to undertake activities covered by section 18A of the act.

“The existing tax framework requiring an audit certificate from PBOs places a financial burden on many smaller PBOs that cannot afford the cost of a full audit,” Tax Consulting SA said.

In contrast, the proposed certificate of examination entails a less costly form of verification but still assures that the donations for which receipts were issued were used for the required activities.

“A certificate of examination may be issued by a registered auditor, but this is not mandatory,” Tax Consulting SA explained.

“It could also take the form of an independent review or a report of factual findings, both of which can be prepared by a qualified independent professional accountant at a lower cost.”

This will allow other independent professionals, such as chartered accountants, to issue the certificate, subject to the requirements that SARS will prescribe by public notice.

“SARS is expected to issue guidance on what the certificate of examination must include, the type of report required and who will be authorised to issue it,” the organisation said.