CONTENTS

Why do we have taxes?
Taxes and the Church
New tax laws for a new society
What is a Public Benefit Organisation?
1. Type of organisation
2. Public benefit activities
3. Public character test
4. Constitutional requirements
5. NPO registration
5.1 Founding document requirements
5.2 Reporting and record-keeping requirements
6. Reporting requirements
7. Prohibition on "excessive" compensation
8. Trading limitations
Deductibility of donations
Application Process
Other taxes
Capital Gains Tax
Donations Tax
Transfer Duty, Estate Duty, Stamp Duty, Skills Development Levy
Property Rates
Appendix: Public Benefit Activities
Useful contacts

WHY DO WE HAVE TAXES?

Since ancient times, governments have used taxes to raise money to finance the costs of public administration and the provision of public services - health care, education, police, agricultural services, and so forth.

People sometimes resent paying taxes. But where fair taxes have been imposed by a democratic government, we ought not to complain. Instead, we should recognise the potential benefits of taxation.

Taxation allows us to pool resources to buy things - like schools and roads - that we all need but that we would have a hard time buying individually. In most societies, income taxes also play an important redistributive function. In other words, people who earn more are expected to pay more. Their tax payments help to subsidise the costs of public services used by poorer people, many of whom are not required to pay income tax. (This is sometimes referred to as a progressive tax structure because the tax rate increases with income. Someone who earns R30 000 a year might be expected to pay 20 per cent of her income in taxes, while someone else earning R120 000 a year might be expected to pay 40 per cent.)

In South Africa, where the policies of former governments have created enormous inequalities, redistribution of wealth is essential to national reconciliation and social stability. Paying taxes is one way that we can demonstrate our love and concern for our neighbours. At the same time, we also have a responsibility to watch what the government does with tax revenues and to speak up if we think public funds are being used inappropriately or unwisely.

TAXES AND THE CHURCH

Many governments excuse certain types of organisations from paying some or all of their taxes, usually because these groups perform public functions which would otherwise fall to the state. Historically, governments have typically offered tax concessions to three categories of organisations: religious, educational, and those involved with poverty relief.

Until recently, the South African government also followed this approach. The Income Tax Act, 1962, contained a provision [sec. 10(1)(f)] that exempted "religious, charitable and educational institutions of a public character" from paying income tax. Any fund dedicated to financing such institutions was also exempt. Similar language appeared in several other tax laws, including:

• the Transfer Duty Act, 1949, that imposes taxes on the transfer of property between parties;
• the Estate Duty Act, 1955, that assesses taxes on the estates of deceased persons;
• the Stamp Duties Act, 1968, that taxes certain legal transactions; and
• the Skills Development Levies Act, 1999, that requires employers to pay a 1 per cent tax on total wages to underwrite sectoral skills training programmes.

To claim the income tax exemption, a church needed to write to the Receiver of Revenue, providing evidence of its eligibility. The Receiver of Revenue would then supply a letter or certificate acknowledging the exemption. Religious institutions that secured income tax exemption in this way were automatically eligible for the other tax exemptions.

NEW TAX LAWS FOR A NEW SOCIETY

Shortly after the election of South Africa's first democratic government, it appointed a special commission to review the tax laws and to recommend changes. The commission, chaired by Michael Katz, published nine reports, the last of which dealt with matters affecting non-profit organisations.

The Katz Commission recommended that, in keeping with international practice, the government expand the range of tax concessions available to non-profit organisations. In particular, the commission proposed:

• The repeal of the existing exemption for "religious, charitable and educational institutions of a public character";
• The introduction of a generic exemption for all "public benefit organisations" and bodies dedicated to funding public benefit organisations;
• The relaxation of restrictions on tax-exempt organisations earning income from trading activities; and
• The extension of tax deductibility to a wider range of donations. (Formerly, only donations to tertiary educational institutions were tax deductible.)

At the same time, the Commission recognised that tax concessions are, in essence, a transfer of public monies to private organisations. The revenue loss to the state is justified in terms of the public benefits generated by a thriving non-profit sector. But this also means that the state has a responsibility to ensure that these funds are used in a manner that serves the public interest.

Many of the Katz Commission recommendations were incorporated into a Taxation Laws Amendment Act, passed by Parliament in June 2000. Further amendments were enacted in June 2002.

WHAT IS A "PUBLIC BENEFIT ORGANISATION" ?

The revised tax system creates a new category of "public benefit organisations" (PBOs) eligible to claim exemption from tax. [See sections 10(1)(cN) and 30 of the Income Tax Act.] To qualify as a PBO, an organisation must:

1. Be a trust, an association or a Section 21 company;
2. Pursue only approved public benefit activities on a non-profit basis and primarily within South Africa;
3. Be of a public character;
4. Submit to the Commissioner of Revenue a copy of the will, constitution, or other written instrument under which the organisation has been established and which meets the requirements of section 30 of the Income Tax Act.;
5. Register as an non-profit organisation (NPO) in terms of the Non-Profit Organisations Act, 1997 (unless the Commissioner of Revenue waives this requirement);
6. Comply with any reporting requirements set by the Commissioner of Revenue;
7. Refrain from paying "excessive" remuneration to any employee, office bearer or member; and
8. Stay within limitations on business activities.

1. Type of organisation

Most PBOs are formed as voluntary associations, trusts, or Section 21 companies. Each of these different structures is governed by certain laws.

• Large, business-like PBOs are often set up as companies, incorporated in terms of section 21 of the Companies Act, 1973. A Section 21 company has articles of association and a board of directors, is registered with the Registrar of Companies and is an independent legal entity.


• In a trust, a group of people (board of trustees) administers certain property or funds for the benefit of other people. The arrangement is set out in a written document (the trust deed) and is regulated by the common law and the Trust Property Control Act, 1988. Trusts usually do not have an independent legal profile, so the trustees may be held personally responsible in any law suit brought against the trust.


• Many PBOs, including most churches, are voluntary associations - a group of three or more people working together to achieve a common non-profit objective. Voluntary associations are usually administered by an executive committee appointed or elected in terms of a constitution. A voluntary association is governed by the common law and can be an independent legal entity if its constitution explicitly provides for this.

2. Public benefit activities

The law requires the Minister of Finance to develop a list of activities "of a philanthropic or benevolent nature". A draft list was published in July 2001. Following extensive consultation, a revised list was incorporated into the Income Tax Act in June 2002 (see appendix). It includes a wide range of activities under various headings:

• Welfare & Humanitarian
• Health Care
• Land and Housing
• Education and Development
• Religion, Belief or Philosophy
• Cultural
• Conservation, Environment & Animal Welfare
• Research and Consumer Rights
• Sport
• Providing of Funds, Assets or Other Resources
• General

The section entitled "Religion, Belief or Philosophy" includes:

(a) The promotion and/or practice of religion which encompasses acts of worship, witness, teaching and community service based on a belief in a deity.
(b) The promotion and/or practice of a belief.
(c) The promotion of, or engaging in, philosophical activities.

The Minister of Finance may add new items to the list of public benefit activities from time to time, as the need arises.

In general, a PBO must also carry out at least 85 per cent of its activities - measured either in terms of time or money expended - within South Africa. However, the Minister of Finance may waive this requirement on request.

3. Public character test

An organisation must be of a "public character" in order to qualify as a PBO. This means that it must meet at least one of the following tests:

• Each activity of the organisation must be for the benefit of or widely accessible to the general public or some sector thereof (other than small and exclusive groups); or
• Each activity of the organisation must be for the benefit of or readily accessible to the poor and needy; or
• At least 85 per cent of the organisation's funding must come from some combination of donations, grants from an organ of state or grants from a foreign state or international organisation.

4. Constitutional requirements

The law requires that a PBO's founding document (constitution, will, or other written instrument) must contain provisions that:

• Require at least three unrelated people to accept responsibility for the organisation's financial management;
• Prohibit any one person from controlling, directly or indirectly, decision-making powers for the organisation;
• Prohibit distribution of the organisation's funds to any person, except in the course of undertaking a public benefit activity;
• Require the organisation to use its funds solely for the purposes for which it was established or else to invest such funds in a financial institution [as defined in section 1 of the Financial Institutions (Investment of Funds) Act, 1984], listed securities [as defined by section 1 of the Stock Exchanges Control Act, 1985], or any other financial instrument approved by the Commissioner;
• Require, in the event of the organisation's dissolution, that its assets be transferred to a similar, approved PBO or a state department in the national, provincial or municipal sphere;
• Prohibit the organisation from using its resources, directly or indirectly, to support, advance or oppose any political party;
• Prohibit the organisation from carrying on any business or trading activity in violation of the trading restrictions (see item 7 below);
• Prohibit the acceptance of any donations that may be reclaimed by the donor (except where the recipient fails to abide by any conditions attached to the donation);
• Require the organisation to submit to the Commissioner any amendments to the founding document.

If an organisation's establishing document does not meet these requirements and cannot be amended timeously to satisfy them, the organisation may still be eligible for tax exempt status if its financial officer provides the Commissioner with a written undertaking pledging compliance with the above requirements. SARS has prepared a model written undertaking (Form EI 2).

5. NPO registration

To be recognised as a PBO in most cases, an organisation must first be registered as a Non-Profit Organisation (NPO) in terms of the Non-Profit Organisations Act, 1997. However, the Commissioner of Revenue may waive this requirement if an organisation can show "good cause" why it should not have to register. (SARS is developing written guidelines for what constitutes "good cause".)

NPO registration is fairly simple. An organisation is required to do two things:

• File an acceptable founding document or constitution with the NPO Directorate of the Department of Social Development; and
• Satisfy the NPO Directorate's reporting requirements.

5.1 Founding document requirements

The founding document or constitutional requirements in the NPO act are related to - but are not the same as - the requirements in the PBO definition in the revised Income Tax Act. Section 12(2) of the NPO Act says that, unless an organisation is established by a law that makes provision for these matters, an organisation's constitution must:

• State the organisation's name and objectives;
• Prohibit the distribution of its income and property to its members or officers, except as reasonable compensation for services rendered;
• Provide for the organisation to be a body corporate with an identity and existence distinct from its officers;
• Provide for the organisation's continued existence despite changes of officers or membership;
• Ensure that members and officers have no rights in the assets of the organisation simply by virtue of their being members or office-bearers;
• Specify the powers of the organisation;
• Specify the organisation's structure and mechanisms for governance;
• Specify the rules for convening and conducting meetings, including requirements for quorums and the recording of minutes;
• Specify the manner of making decisions;
• Require that the organisation's financial transactions be conducted by means of a banking account;
• Specify the ending date for the body's financial year;
• Specify a procedure for amending the constitution;
• Specify a procedure for dissolution of the organisation;
• Require that, on dissolution, the organisations assets be distributed to an NPO with similar purposes.

An organisation's constitution may regulate other matters relevant to its affairs. Some of these are listed in section 12(3) of the NPO Act.

The NPO Directorate may only refuse to register an NPO if its founding document does not meet these requirements. The Director must notify the applicant in writing if the submitted constitution is not acceptable. Applicants have one month in which to correct the deficiencies.

Upon registration, the NPO Directorate must supply the organisation with a certificate of registration and a registration number. An NPO remains registered until it is deregistered. Deregistration may be voluntary (due to the organisation's request or its dissolution) or involuntary (due to the organisation's failure to comply with the terms of its constitution or the reporting requirements).

The NPO Directorate can provide you with an application for registration and a model constitution. These materials are also available on their web site.

The Legal Resources Centre has developed a model constitution that takes into account the requirements of both the NPO Act and the Income Tax Act. They have also published a useful Guide to the Nonprofit Organisations (NPO) Act (Information Series No. 2, 2000). These materials are available from the LRC. The Guide and other publications in the Information Series are posted on the LRC web site.

5.2 Reporting and record-keeping requirements

Once registered, an NPO must record and report certain types of information to show that it is operating in a manner consistent with its non-profit status. It must:

• Indicate its registered status and registration number on all its documents;
• Keep accounting records of its income, expenditure, assets and liabilities and retain these, with receipts and other supporting documentation, for 5 years;
• Draw up a balance sheet and a statement of income and expenditure within six months of the end of the organisation's financial year;
• Have an accounting officer review the organisation's records and financial statements and, within two months of their completion, prepare a report confirming that the reports are consistent with the records, that the organisation's accounting practices are appropriate and properly applied, and that the organisation has complied with the financial reporting requirements of the Act;
• Prepare an annual narrative report of the organisation's activities (see below);
• Submit its financial statements, accounting officer's report and narrative report to the NPO Directorate within nine months of the end of its financial year;
• Submit to the NPO Directorate the names and physical, business and residential addresses of office bearers within one month of their appointment or election (even when an officer is reappointed or reelected); and
• Submit to the NPO Directorate a physical address in the Republic for the service of documents and notify the Directorate one month in advance of any change in this address.

The content of the annual narrative report has been prescribed by regulations. [See Government Gazette, No. 19199 (31 August 1998), item 8.] Narrative reports are required to:

• Specify the period under review;
• Describe each of the organisation's major projects including its name, which of the objectives in the organisation's constitution the project met, what activities the project pursued, and the benefits and beneficiaries of the project;
• Indicate how many meetings of the office-bearers were held and whether they were quorate;
• Indicate whether an annual general meeting was held timeously, and if not, why not;
• Indicate whether a special general meeting was held, and if so, in respect of what issues;
• Indicate whether the organisation's constitution, address, or office bearers have changed, and if so, whether the organisation has provided the necessary notification to the NPO Directorate;
• State the name of the accounting officer appointed to review the organisation's financial records and practices;
• Describe the organisation's accounting policies;
• Indicate whether the financial statements submitted have been approved by the officers;
• Specify what percentage of the organisation's budget was spent on administrative expenses and what percentage went to projects;
• Specify the types of funding the organisation received;
• Indicate whether the organisation in involved in fundraising from the general public and/or businesses;
• Indicate whether the organisation was assisted in fund- raising by a staff member, a member of the organisation, or a person outside of the organisation, and if so, whether such assistance was paid or voluntary;
• Describe the gender, race and skill profile of the organisation's staff; and
• Detail any changes in the staffing compliment during the period under review.

The NPO Directorate has published a model narrative report to assist organisations in fulfilling this requirement.

6. Reporting requirements

The South African Revenue Service will have its own annual reporting requirements, separate from those imposed by NPO registration. The amended Income Tax Act gives the Commissioner the power to determine the reporting requirements PBOs must meet. These have not yet been established. It is hoped that it will be possible to use portions of an organisation's annual reporting under the NPO Act to satisfy the PBO reporting requirement.

7. Prohibition on "excessive" compensation

An organisation may not be tax-exempt if it pays any person "excessive" compensation, including its own employee, office bearer, or member. The amended Income Tax Act does not define "excessive" except to say that it must be assessed "having regard to what is generally considered reasonable in the sector and in relation to the service rendered."

This provision is one of several primarily intended to prevent people from abusing the tax concessions offered to PBOs. This restriction is unlikely to become an obstacle to the recognition of the exempt status of legitimate PBOs.

8. Trading limitations

Recognising the difficult financial situations in which most non-profit organisations find themselves, the new law allows organisations to earn income from a wider variety of business and commercial activities without jeopardising their tax exempt status. The following types of business income are permitted:

• Income totalling less than R25 000 per annum or 15 per cent of gross annual receipts, whichever is greater;
• Income from trading that is directly related to the organisation's purpose and that does not compete unfairly with non-exempt traders, provided the income generated is used to recover costs;
• Income from occasional trading conducted primarily using uncompensated, voluntary assistance; and
• Income from any other type of business activity explicitly approved and gazetted by the Minister of Finance.

The amended Income Tax Act requires a PBO to acknowledge explicitly these constraints on business income in its constitution or founding document.

DEDUCTIBILITY OF DONATIONS

One of the ways the government recognises the value of PBOs and encourages people to give money to support them is by allowing donors to deduct their gifts from their gross income, thereby lowering their taxes. In the past, only donations to universities and other tertiary educational institutions were tax deductible. Section 18A of the amended Income Tax Act empowers the Minister of Finance to publish a list of public benefit activities, donations in aid of which will be tax deductible.

A draft list was published in July 2001, and a revised list was incorporated into the Income Tax Act in June 2002. In terms of the list, the following public benefit activities will be approved for the purposes of tax deductions:

• Education by a school or higher education institution;
• Educare and early childhood development services;
• Provision of school buildings and equipment;
• Addressing needs in education provision, learning, teaching, training, curriculum support, governance, whole school development, or safety and security at educational institutions;
• Educational enrichment, academic support, supplementary tuition, bridging courses or outreach programmes for the poor and needy;
• Adult basic education and training and further education and training;
• Employment training;
• Education and training of persons with permanent mental or physical disabilities;
• Prevention of HIV infection, distribution of information about HIV/AIDS or the provision of care or counseling to people living with by HIV/AIDS (including the counseling of family members of sufferers);
• Provision of health care services to poor and needy persons;
• Care or counseling of terminally ill persons or persons with a severe physical or mental disability (including the counseling of their families);
• Care or counselling of abandoned, abused, neglected, orphaned or homeless children;
• Care or counselling of poor and needy aged persons;
• Establishment and management of a transfrontier area.

Any taxpayer wishing to take advantage of this concession must have a receipt from the beneficiary PBO indicating:

• the organisation's name, address, and reference number;
• the donor's name and address;
• the date and amount of the donation;
• a certification that the receipt is issued for the purposes of section 18A of the Income Tax Act, 1962, and that the donation has been or will be used exclusively for the objects of the beneficiary PBO.

The annual ceiling on deductions has been raised to R1000 or 5 per cent of taxable income, whichever is greater.

In terms of the law, an organisation may issue the required receipt only if it is engaged exclusively in public benefit activities that have been designated as donor-deductible. However, SARS has indicated that it will permit an organisation to conduct both donor-deductible and non-donor-deductible activities provided that income and expenditure on the former are kept separate and certified as such by a properly qualified accountant. [See "Comments on Representations to the Joint Sitting of the PCOF and the SCOF on the Taxation Laws Amendment Bill, 2002", 14 June 2002, pp.14-15.]

APPLICATION PROCESS

The amendments to the Income Tax Act affecting PBOs were promulgated with effect from 15 July 2001. Any organisation whose tax exempt status was based on the old concession for "religious, charitable and educational institutions of a public character" will continue to enjoy an exemption until notified in writing by the Commissioner of Revenue that the exemption has been terminated. Currently-exempt organisations have until 31 December 2003 in which to:

• apply for exemption in terms of the new requirements; or
• submit a written undertaking to the Commissioner of Revenue confirming its intention to apply for exemption as a PBO and to meet the corresponding requirements.

An application for income tax exemption is available from SARS (Form EI 1). In addition to this form, an applicant is required to submit:

• a copy of the organisation's constitution, trust deed, articles of association, or other founding document;
• a detailed narrative description of the organisation's past, present and planned activities in order of importance and with an estimate of the percentage of time devoted to each;
• a list of past and present sources of income;
• details of the organisation's membership criteria, structure, and powers;
• an explanation of the way in which assets will be distributed on dissolution;
• an itemised description of any services rendered by the organisation in return for payment;
• samples of recent documents published or distributed by the organisation; and
• the organisation's latest financial statement.

Submission of a written undertaking (Form EI 2) will be sufficient to maintain the organisation's tax exempt status for up to five years, during which time the organisation must take the steps necessary to enable it to apply for recognition as a PBO, including making any necessary amendments to its constitution or founding document. (Note that this concession may be forfeited if, during the five-year grace period, an organisation makes any other changes to its constitution or founding document without also making the adjustments necessary to meet the requirements for tax exemption.)

Forms EI 1 and EI 2 are available directly from SARS or from the SARS web site (see the PBO section under "Income Tax").

Group registration

A group of organisations that

• carry on public benefit activities,
• share a common purpose, and
• operate under the direction of a regulating or co-ordinating body

In such a case, the regulating or co-ordinating body is responsible for ensuring that the subsidiary organisations comply with the law. In practice, this will probably mean that the parent body will have to account to SARS for the financial activity of all other bodies included in the exempt group.

OTHER TAXES

Capital Gains Tax

The capital gains tax, introduced in 2001, is a form of income tax, so organisations that are exempt from income tax will also be exempt from capital gains tax. Any capital donation (non-cash donations such as property, vehicles, shares, etc.) to a recognised PBO will only be exempt from capital gains tax if it is donated for 18A activities (i.e., if it would have been tax deductible had it been a cash donation). If capital gains tax is assessed on a capital donation, it is the donor (not the recipient) who must pay the tax.

Donations Tax

Individuals may make tax-free donations of up to R30 000 a year (R10 000 per year in the case of private companies). Contributions in excess of these amounts are subject to a donations tax of 20 per cent, payable by the donor. However, donations to certain tax-exempt entities, including approved PBOs, are not taxed.

Transfer Duty, Estate Duty, Stamp Duty, Skills Development Levy

Any organisation recognised by SARS as a PBO - and therefore exempt from income tax - will also be exempt from paying transfer duties, estate duties, and stamp duties.

The exemption from the Skills Development Levies Act, 1999, previously available only to religious and charitable organisations, is similarly offered to any income tax exempt PBO "which solely carries on any religious or charitable public benefit activity determined by the Minister" or to any PBO that provides funds solely to such an exempt PBO.

Property Rates

[Thanks to Mr. Henry Bennett for the material in this section.]

The system of property rating is in transition. The Constitution gives municipal governments the right to levy rates on property, subject to regulation by national legislation. The Property Rates Bill, which will give effect to this arrangement, has not yet been tabled. However, it is expected to give municipalities the power to tax all property, except infrastructure, and to grant rebates or exemptions in terms of broad guidelines. Schools, religious institutions and certain works of mercy may yet be classed as "infrastructure", but this is unlikely. Once the Bill is enacted, religious institutions will probably have to argue for exemption from rates in each separate municipality.

At present, the old local authorities rating ordinances still apply. In terms of these ordinances, religious institutions - including residences for ministers of religion registered in the name of the institution concerned - are absolutely exempt from rates. Land used by religious institutions need not be zoned for religious purposes in order for the exemption to apply. The sole test is "exclusive use".

If an institution has land which is not being used for religious purposes, then the municipality can determine what part is exempt from rates and what part should be subject to rates. In Gauteng, the ordinance says specifically that the exemption will not apply where any property is let for any continuous period of more than ten days, either alone or together with any period of renewal.

Religious institutions that have been paying rates on properties owned by them may be able to reclaim payments for up to three years in arrears on any properties that have been used exclusively for religious purposes or for the accommodation of their ministers.

APPENDIX: PUBLIC BENEFIT ACTIVITIES

Part I - Activities Qualifying for Tax Exemption in terms of Sec. 30

1. Welfare and Humanitarian

1. The care or counseling of, or the provision of education programmes relating to, abandoned, abused, neglected, orphaned or homeless children.
2. The care or counseling of poor and needy persons where more than 90 per cent of those persons to whom the care or counseling are provided are over the age of 60.
3. The care or counseling of, or the provision of education programmes relating to, physically or mentally abused and traumatized persons.
4. The provision of disaster relief.
5. The rescue or care of persons in distress.
6. The provision of poverty relief.
7. Rehabilitative care or counseling or education of prisoners, former prisoners and convicted offenders and persons awaiting trial.
8. The rehabilitation, care or counseling of persons addicted to a dependence-forming substance or the provision of preventative and education programmes regarding addiction to dependence-forming substances.
9. Conflict resolution, the promotion of reconciliation, mutual respect and tolerance between the various peoples of South Africa.
10. The promotion or advocacy of human rights and democracy.
11. The protection of the safety of the general public.
12. The promotion or protection of family stability.
13. The provision of legal services for poor and needy persons.
14. The provision of facilities for the protection and care of children under school-going age of poor and needy parents.
15. The promotion or protection of the rights and interests of, and the care of, asylum seekers and refugees.
16. Community development for poor and needy persons and anti-poverty initiatives, including--
    1. the promotion of community-based projects relating to self-help, empowerment, capacity building, skills development or antipoverty;
    2. the provision of training, support or assistance to community-based projects contemplated in item (i); or
    3. the provision of training, support or assistance to emerging micro enterprises to improve capacity to start and manage businesses, which may include the granting of loans on such conditions as may be prescribed by the Minister by way of regulation.

2. Health Care

1. The provision of health care services to poor and needy persons.
2. The care or counseling of terminally ill persons or persons with a severe physical or mental disability, and the counseling of their families in this regard.
3. The prevention of HIV infection, the provision of preventative and education programmes relating to HIV/AIDS.
4. The care, counseling or treatment of persons afflicted with HIV/AIDS, including the care or counseling of their families and dependants in this regard.
5. The provision of blood transfusion, organ donor or similar services.
6. The provision of primary health care education, sex education or family planning.

3. Land and Housing

1. The development, construction, upgrading, conversion or procurement of housing units for the benefit of poor and needy persons.
2. The development, servicing, upgrading or procurement of stands, or the provision of building materials, for purposes of the activities contemplated in subparagraph (a).
3. The provision of residential care for retired persons, where more than 90 per cent of the persons to whom the residential care is provided are over the age of 60 and regular meals and nursing services are provided by the organisation carrying on such activity.
4. Building and equipping of community centres, clinics, sport facilities or crèches or other facilities of a similar nature for the benefit of the poor and needy.
5. The promotion, facilitation and support of access to land and use of land, housing and infrastructural development for promoting official land reform programmes.
6. Granting of loans for purposes of subparagraph (a) or (b) subject to such conditions as may be prescribed by the Minister by way of regulation.
7. The protection, enforcement or improvement of the rights of poor and needy tenants, labour tenants or occupiers, to use or occupy land or housing.

4. Education and Development

The provision of education by a "school" as defined in the South African Schools Act, 1996, (Act No. 84 of 1996).

1. The provision of "higher education" by a "higher education institution" as defined in terms of the Higher Education Act, 1997, (Act No. 101 of 1997).
2. "Adult basic education and training", as defined in the Adult Basic Education and Training Act, 2000, (Act No. 52 of 2000), including literacy and numeracy education.
3. "Further education and training" provided by a "public further education and training institution" as defined in the Further Education and Training Act 1998, (Act No. 98 of 1998).
4. Training for unemployed persons with the purpose of enabling them to obtain employment.
5. The training or education of persons with a severe physical or mental disability.
6. The provision of bridging courses to enable educationally disadvantaged persons to enter a higher education institution as envisaged in subparagraph (b).
7. The provision of educare or early childhood development services for pre-school children.
8. Training of persons employed in the national, provincial and local spheres of government, for purposes of capacity building in those spheres of government.
9. The provision of school buildings or equipment for public schools and educational institutions engaged in public benefit activities contemplated in subparagraphs (a) to (h).
10. Career guidance and counseling services provided to persons for purposes of attending any school or higher education institution as envisaged in subparagraphs (a) and (b).
11. The provision of hostel accommodation to students of a public benefit organisation contemplated in section 30 or an institution, board or body contemplated in section 10(1)(cA)(i), carrying on activities envisaged in subparagraphs (a) to (g).
12. Programmes addressing needs in education provision, learning, teaching, training, curriculum support, governance, whole school development, safety and security at schools, pre-schools or educational institutions as envisaged in subparagraphs (a) to (h).
13. Educational enrichment, academic support, supplementary tuition or outreach programmes for the poor and needy.
14. The provision of scholarships, bursaries and awards for study, research and teaching on such conditions as may be prescribed by the Minister by way of regulation in the Gazette.

5. Religion, Belief or Philosophy

1. The promotion or practice of religion which encompasses acts of worship, witness, teaching and community service based on a belief in a deity.
2. The promotion and/or practice of a belief.
3. The promotion of, or engaging in, philosophical activities.

6. Cultural

1. The advancement, promotion or preservation of the arts, culture or customs.
2. The promotion, establishment, protection, preservation or maintenance of areas, collections or buildings of historical or cultural interest, national monuments, national heritage sites, museums, including art galleries, archives and libraries.
3. The provision of youth leadership or development programmes.

7. Conservation, Environment and Animal Welfare

1. Engaging in the conservation, rehabilitation or protection of the natural environment, including flora, fauna or the biosphere.
2. The care of animals, including the rehabilitation, or prevention of the ill-treatment of animals.
3. The promotion of, and education and training programmes relating to, environmental awareness, greening, clean-up or sustainable development projects.
4. The establishment and management of a transfrontier area, involving two or more countries, which--
   1. is or will fall under a unified or coordinated system of management without compromising national sovereignty; and
   2. has been established with the explicit purpose of supporting the conservation of biological diversity, job creation, free movement of animals and tourists across the international boundaries within the peace park, and the building of peace and understanding between the nations concerned.

8. Research and consumer rights

1. Research including agricultural, economic, educational, industrial, medical, political, social, scientific and technological research.
2. The protection and promotion of consumer rights and the improvement of control and quality with regard to products or services.

9. Sport

The administration, development, co-ordination or promotion of sport or recreation in which the participants take part on a non-professional basis as a pastime.

10. Providing of funds, assets or other resources

The provision of--

1. funds, assets, services or other resources by way of donation;
2. assets or other resources by way of sale for a consideration not exceeding the direct cost to the organisation providing the assets or resources;
3. funds by way of loan at no charge; or
4. assets by way of lease for an annual consideration not exceeding the direct cost to the organisation providing the asset divided by the total useful life of the asset, to any--
   1. any public benefit organisation which has been approved in terms of section 30;
   2. any institution, board or body contemplated in section 10(1)(cA)(i), which conducts one or more public benefit activities in this part (other than this paragraph);
   3. any association of persons carrying on one or more public benefit activity contemplated in this part (other than this paragraph), in the Republic; or (iv) any department of state or administration in the national or provincial or local sphere of government of the Republic, contemplated in section 10(1)(a) or (b).

11. General

1. The provision of support services to, or promotion of the common interests of public benefit organisations contemplated in section 30 or institutions, boards or bodies contemplated in section 10(1)(cA)(i), which conduct one or more public benefit activities contemplated in this part.
2. The hosting of any international event approved by the Minister for purposes of these regulations, having regard to--
   1. the foreign participation in that event; and
   2. the economic impact that event may have on the country as a whole.

PART II - Activities Qualifying for Donor Deduction in terms of Sec. 18A

1. Welfare and Humanitarian

1. The care or counseling of, or the provision of education programmes relating to, abandoned, abused, neglected, orphaned or homeless children.
2. The care or counseling of poor and needy persons where more than 90 per cent of those persons to whom the care or counseling are provided are over the age of 60.

2. Health Care

1. The provision of health care services to poor and needy persons.
2. The care or counseling of terminally ill persons or persons with a severe physical or mental disability, and the counseling of their families in this regard.
3. The prevention of HIV infection, the provision of preventative and education programmes relating to HIV/AIDS.
4. The care, counseling or treatment of persons afflicted with HIV/AIDS, including the care or counseling of their families and dependants in this regard.

3. Education and Development

1. The provision of education by a "school" as defined in the South African Schools Act, 1996, (Act No. 84 of 1996).
2. The provision of "higher education" by a "higher education institution" as defined in terms of the Higher Education Act, 1997, (Act No. 101 of 1997).
3. "Adult basic education and training", as defined in the Adult Basic Education and Training Act, 2000 (Act No. 52 of 2000), including literacy and numeracy education.
4. "Further education and training" provided by a "public further education and training institution" as defined in the Further Education and Training Act 1998, (Act No. 98 of 1998).
5. Training for unemployed persons with the purpose of enabling them to obtain employment.
6. The training or education of persons with a severe physical or mental disability.
7. The provision of bridging courses to enable educationally disadvantaged persons to enter a higher education institution as envisaged in subparagraph (b).
8. The provision of educare or early childhood development services for pre-school children.
9. The provision of school buildings or equipment for public schools and educational institutions engaged in public benefit activities contemplated in subparagraphs (a) to (h).
10. Programmes addressing needs in education provision, learning, teaching, training, curriculum support, governance, whole school development, safety and security at schools, pre-schools or educational institutions as envisaged in subparagraphs (a) to (h).
11. Educational enrichment, academic support, supplementary tuition or outreach programmes for the poor and needy.

4. Conservation, Environment and Animal Welfare

The establishment and management of a transfrontier area, involving two or more countries, which--

1. is or will fall under a unified or coordinated system of management without compromising national sovereignty; and
2. has been established with the explicit purpose of supporting the conservation of biological diversity, job creation, free movement of animals and tourists across the international boundaries within the peace park, and the building of peace and understanding between the nations concerned.