Our experts explain important SARS guidance notes relating to the required s18A certificate for public benefit organisations (PBOs)
What is an audit certificate?
Interpretation Notice 112, or IN 112, states that an audit certificate for the purposes of s18A of the Income Tax Act, 58 of 1962 (the Act), is a physical document (for example a form, declaration or letter) that provides an opinion on the use of donations for which an approved organisation or department issues s18A receipts. For a summary of the detailed requirements of what needs to be included in the audit certificate click here.
Who must obtain and keep an audit certificate?
Only the following two types of public benefit organisations (PBOs) need to obtain and keep audit certificates:
* Part l public benefit activities include activities that relate to welfare and humanitarian aid; healthcare; education and development; religion, belief or philosophy; culture; conservation, the environment and animal welfare; research and consumer rights; sport; and provision of funds, assets or other resources.
** Part ll public benefit activities include activities that relate to welfare and humanitarian aid; healthcare; education and development; conservation, the environment and animal welfare; and land and housing.
From whom must an audit certificate be obtained?
IN 112 states that although the Act does not specify from whom an audit certificate must be obtained, SARS recommends that the person issuing the audit certificate must be independent of the PBO and suitably qualified and that appropriate work must have been performed to enable that person to express the opinion in the audit certificate.
What should the audit certificate contain?
The issuing of this guidance note may indicate that SARS will be stricter in how it monitors compliance with s18A of the Act and the requirements relating to audit certificates.
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