By Chris Herbst, Chartered Business Accountant in Practice (CBAP) with CIBA, General Tax Practitioner (GTP) with SAIT, Stellenbosch University. Team registered with SAIT, SAIPA and CIBA.
A donation to a registered charity only reduces your tax when the paperwork behind it is right. The paperwork is the section 18A certificate, and SARS now checks it against data the organisation itself reports. This guide explains what the certificate is, what it must show, how much of a donation you can deduct, where it goes on your ITR12 and what causes SARS to disallow the claim.
What is a section 18A certificate?
A section 18A certificate (SARS also calls it a section 18A receipt or donation tax certificate) is the document an approved organisation issues to confirm a donation you made to it. Section 18A of the Income Tax Act allows a deduction for donations to approved organisations, and the SARS Comprehensive Guide to the ITR12 states that a donation only qualifies if the receipt states that it is issued in terms of section 18A.
Is a section 18A certificate the same as an ordinary donation receipt?
No. Any charity can thank you for a gift, but only an organisation approved by SARS for section 18A purposes can issue a receipt that supports a tax deduction. An ordinary receipt or bank statement does not support the claim on its own.
Why does the certificate matter at filing time?
The SARS ITR12 guide lists the section 18A donation tax certificate among the supporting documents you need to complete your return. If SARS selects your return for verification, it is the document SARS asks for. Our guide to SARS verification and supporting documents explains that process.
Which organisations can issue a section 18A certificate?
Only organisations the Commissioner has approved for section 18A can issue the certificate. The SARS Basic Guide to Section 18A Approval (Issue 5) explains that approval is separate from public benefit organisation (PBO) status: an organisation applies for section 18A approval in addition to its tax exemption, and SARS then issues a reference number that must appear on every receipt.
Does every registered PBO qualify?
No. Section 18A approval covers specific public benefit activities carried on in South Africa. A PBO that runs both qualifying and other activities can hold ring-fenced approval and may only issue section 18A receipts for donations used in the qualifying activities.
What happens if the organisation was not approved?
The SARS guide states it directly: taxpayers who receive section 18A receipts from an organisation not formally approved by the Commissioner are not entitled to a deduction for those donations. The approval has to be in place for the year of assessment in which you donated.
What must a section 18A receipt show?
The SARS Basic Guide to Section 18A Approval lists the details a valid receipt must contain. Check each one when the receipt arrives, not when you file.
The core details on every receipt
- The section 18A reference number SARS issued to the organisation.
- The date the donation was received.
- The name and address of the organisation, for enquiries.
- Your name and address as the donor.
- The amount of the donation if it was cash, or the nature and value of the donation if it was not cash.
- A certification that the receipt is issued for the purposes of section 18A and that the donation has been or will be used exclusively for the organisation's approved objects.
The extra donor details required since 1 March 2023
The same SARS guide records that Public Notice 3082 (Government Gazette 48104 of 24 February 2023) added further information to every section 18A receipt issued on or after 1 March 2023. For an individual donor this includes:
- The nature of the donor (a natural person).
- Your identification type and number, such as your South African ID number, or your passport number and country of issue.
- Your income tax reference number, if available.
- Your contact number and e-mail address.
- A unique receipt number.
These details exist so that the receipt you claim can be matched to the data the organisation reports to SARS. Give the organisation your ID number and tax reference number when you donate.
Which donations qualify for the section 18A deduction?
A donation is a gift with nothing received in return. The SARS Basic Guide describes it this way: the donor is impoverished and the donee enriched, with no conditions and no personal benefit for the donor. If the organisation gives you something in exchange, the payment is not a donation.
Do cash donations qualify?
Yes. Cash includes payments by EFT, credit or debit card and postal order, and the donation must be actually paid or transferred during the year of assessment.
Do donations in kind qualify?
Yes, within limits. Property in kind includes trading stock, business assets, personal assets such as furniture or a vehicle, and listed shares or financial instruments issued by an eligible financial institution. No deduction is allowed for property subject to a usufruct or similar right, or for an intangible asset or another financial instrument. The Income Tax Act sets a formula to value donated immovable property of a capital nature.
Which payments do not qualify?
The SARS Basic Guide gives a list of payments that are not donations, including:
- Tickets to a fundraising dinner or charity golf day, and raffle or lottery tickets.
- A successful bid at a charity auction.
- School fees, entrance fees and compulsory school levies.
- Tithes and offerings to a church or faith-based organisation in support of its religious activities.
- Membership fees, pledges, promissory notes and payments promised in future instalments.
Does donating my time or professional skill count?
No. A service is not a donation of property, so an accountant, doctor, lawyer or plumber who works free of charge for an approved organisation receives no section 18A deduction for the value of that work.
How much of a donation can you deduct?
For an individual, the deduction is limited to 10% of taxable income, calculated before the section 18A deduction itself and excluding retirement fund lump sum benefits, retirement fund lump sum withdrawal benefits and severance benefits. The ITR12 guide confirms that SARS applies this limit programmatically on assessment.
What happens to donations above the 10% limit?
The excess is carried forward. The SARS Basic Guide explains that the amount disallowed only because it exceeds the limit is deemed to be a donation paid in the next year of assessment, again subject to the 10% limit, and it keeps rolling forward until it is used. SARS carries it forward for you and shows it against code 4011.
A worked example from the SARS guide
The ITR12 guide works through a taxpayer with taxable income of R500,000 who donated R170,000 to approved organisations. The deduction allowed is R50,000 (10% of R500,000), and the balance of R120,000 is carried forward to the following year under code 4011.
Does foreign income change the deduction?
Yes. The ITR12 guide states that where you received foreign income, the deductions for donations and retirement annuity contributions are apportioned in the ratio of foreign and local income to total income. If you also contribute to a retirement annuity, see our guide to the IT3(f) certificate and code 4006.
How do payroll-giving donations reach your ITR12?
If you donate through your employer's payroll-giving programme, your employer takes the donation into account when it calculates your monthly PAYE. The SARS Basic Guide limits this for employees' tax purposes to 5% of remuneration after certain deductions in the Fourth Schedule.
Which code shows payroll donations on the IRP5?
Code 4030. The ITR12 guide states that the IRP5 is accepted as proof of the donation under section 18A(2)(b), and on assessment SARS converts code 4030 to 4011 and allows the deduction. You do not enter these amounts again; the code 4011 field on the return excludes amounts already on your IRP5. Our guide to SARS code 3828 covers how other employer-administered contributions appear on the IRP5.
Can my employer include a donation I made directly?
No. The employer may only consider donations made through its own payroll-giving programme, for which it holds section 18A receipts. A donation you made directly is claimed by you on your ITR12 with your own certificate.
How does SARS check your section 18A claim?
SARS checks the claim in two ways: against the organisation's approval and against the organisation's own data.
What is the IT3(d) return?
SARS Notice 3631 (Government Gazette 48867) lists section 18A organisations that issued receipts among the persons who must submit third party returns, on form IT3(d). The SARS third party data submission page describes the IT3(d) data as the section 18A receipts issued, including the organisation, donor and donation information.
When do organisations submit IT3(d) data?
Notice 3631 sets two due dates: 31 October for the period 1 March to 31 August, and 31 May for the full year from 1 March to the end of February. Organisations reporting for the first time were not required to submit for 1 March 2023 to 31 August 2023.
What messages appear on the ITA34 when a claim fails?
The ITR12 guide states that SARS validates the PBO number you declare. If it fails, the deduction is disallowed and one of these reasons shows on your notice of assessment:
- Valid PBO number not approved for S18A
- Invalid PBO number
- PBO number invalid for the reported year of assessment
- Not a S18A approved institution for this year of assessment
Our guide to reading your ITA34 explains where these appear.
- Direct donation: Where it goes: Code 4011 on ITR12; What SARS checks: PBO number and IT3(d) data
- Payroll donation: Where it goes: Code 4030 on IRP5; What SARS checks: Converted to 4011 on assessment
- Excess over 10%: Where it goes: Carried forward; What SARS checks: Applied in the next year
- Receipt details: Where it goes: Your records; What SARS checks: Requested on verification
How do you claim section 18A donations on eFiling?
The steps below follow the ITR12 guide.
Step 1: Gather every certificate for the year
Collect a section 18A certificate for each organisation you donated to directly, and your IRP5 for payroll donations. Check that each receipt carries the organisation's reference number and your ID and tax reference number. Our documents checklist for your tax return lists the other certificates you need.
Step 2: Answer the donations question on the return wizard
On the ITR12 wizard, answer Yes to "Do you want to claim donations made to an approved Public Benefit Organisation in terms of s18A?" and enter how many organisations you donated to. The maximum the field accepts is 99.
Step 3: Complete code 4011
Enter the total amount donated during the year of assessment next to code 4011. Leave out any amount already on your IRP5 under code 4030.
Step 4: Complete the details for each organisation
For each organisation, enter the name of the entity (required from the 2024 year of assessment), the PBO number exactly as it appears on the receipt and the amount donated to that organisation. If you donated to more than twenty organisations, complete the details for the top twenty.
Step 5: File and read the assessment
Submit the return, then check the ITA34 for any donation disallowance message. If SARS disallowed a valid claim, the route is a request for correction or a notice of objection, depending on whether you are correcting your own return or disputing the assessment.
What are the common mistakes with section 18A claims?
Claiming without a valid receipt
A bank statement or a thank-you letter is not a section 18A certificate. Without the certificate, the deduction does not stand.
Claiming payroll donations twice
Payroll donations are already on your IRP5 under code 4030 and SARS converts them on assessment. Adding them to code 4011 duplicates the claim.
Typing the PBO number wrongly
The PBO number is validated on assessment. A single wrong digit produces an "Invalid PBO number" disallowance.
Claiming non-donations
Raffle tickets, gala dinner tickets, school fees and church tithes for religious activities are not section 18A donations, even when the organisation is approved.
Leaving out your ID or tax number when donating
Receipts issued from 1 March 2023 must carry donor identification details so they match the IT3(d) data. A receipt without them is harder to match and harder to defend on verification.
For other deductions people overlook, read tax deductions you might be missing out on, and for interest certificates see our IT3(b) guide. All of our personal tax guides are collected on the personal tax hub.
Do You Need Help With Your Section 18A Certificate?
We prepare ITR12 returns for South African taxpayers across the country, including checking every section 18A certificate against SARS's requirements before the donation is claimed. See what is included on our personal tax pricing page, or contact us to have your return and donation claims prepared.
