Donations tax deduction explained

Which donations qualify

Only donations to organisations that SARS has approved under section 18A of the Income Tax Act qualify. These are public benefit organisations (PBOs) and some other bodies doing approved work, such as welfare, health care, education and conservation. SARS publishes the list of approved organisations, so you can check before you give.

The limit

Your deduction for the year is limited to 10% of your taxable income, before retirement fund lump sums and severance benefits. Anything above that is carried forward and treated as a donation in the next tax year, again within that year’s 10%, until it is used up.

How much tax it saves

The deduction comes off your taxable income, so it saves tax at your marginal rate. At a 31% marginal rate, a R 5 000 donation saves R 1 550 in tax, so the donation costs you R 3 450.

The receipt you need

You need a section 18A receipt from the organisation. It must show the organisation’s PBO reference number, its name and address, your name and address, the date and amount of the donation (or a description of a donation in kind), and a certification that the donation has been or will be used exclusively for approved public benefit activities, issued for section 18A. Donations made through payroll giving appear on your IRP5, so you do not need separate receipts for those.

Claiming it

Enter the donations on your annual tax return with the details from each receipt, or check them if SARS has pre-filled them. Keep the receipts in case SARS asks for them.

Frequently asked questions

Can I claim donations to my church?

Only if it is approved under section 18A and gives you a section 18A receipt. Donations to organisations without that approval cannot be deducted.

Do donations of goods count?

Yes, donations in kind can qualify, but the value you can deduct depends on the kind of asset. Services and your time do not.

What if I give more than 10% of my income?

The excess is carried forward to the next tax year and deducted then, within that year’s 10% limit.

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