What CFOs need to know about the new PBO requirements from SARS


BDO’s Johann Benadé reveals how PBO donations will enhance transparency and impact.

Given South Africa’s significant social and economic challenges, the role of public benefit organisations (PBOs) can’t be overstated. These organisations serve as vital conduits for addressing pressing social issues and improving the lives of individuals and communities in need. From poverty alleviation to healthcare access, education support and income generation, PBOs are on the frontlines of positive change.

Consider the staggering unemployment rate in South Africa, recorded at 32.9 percent in the first quarter of 2023 – the highest in the world. This crisis, compounded by the disproportionate impact on the youth (61 percent youth unemployed in the last quarter of 2022), demands comprehensive solutions. PBOs play a pivotal role in addressing these challenges head-on.

However, as these organisations increasingly rely on funding from the private sector, new considerations must come into play.

Enter the significance of corporate and individual donations to PBOs. Companies, as well as high net-worth individuals and everyday South Africans, contribute to these organisations with a shared goal: to drive positive change.

For businesses, supporting PBOs aligns with corporate social responsibility commitments, fostering goodwill and enhancing their reputations. It's a tangible way for companies to demonstrate their dedication to the wellbeing of society and the communities they serve.

The role of CFOs as leaders of their organisations cannot be emphasised strongly enough. They provide financial insights and analysis that inform key strategic decisions, such as the company’s participation in corporate social responsibility initiatives, BEE considerations, market expansion, product development, and pricing strategies.

Crucially, donating to PBOs allows both companies and individuals to make a substantial impact on social challenges. When companies invest in PBOs, they are investing in their customers, communities, and the long-term prosperity of their operating environments.

Another benefit can be found in Section 18A of the Income Tax Act, which provides for a tax deduction of up to 10 percent of a taxpayer’s taxable income in respect of donations made to qualifying PBOs. This includes companies, as well as individuals.

New SARS requirements

In light of these dynamics, the South African Revenue Service (SARS) has introduced new requirements that enhance transparency and accountability regarding PBO donations. These changes emphasise the importance of accurate reporting and streamlined processes.

Effective from March 1, 2023, PBOs are now required to submit biannual reports of all donations received. These reports will ensure that PBOs and donors are aligned in their records, minimising errors and potential discrepancies.

This step forward not only benefits organisations, but donors too. By automating the process of populating donation details on tax returns, SARS reduces the potential for errors and ensures compliance. Furthermore, the more comprehensive information required in the updated Section 18A certificates – encompassing donor identification, contact details, and unique receipt numbers – creates a more robust system that promotes trust and accountability.

CFOs must ensure that the company complies with all financial and regulatory requirements. They must stay up-to-date with changing financial regulations and implement necessary changes in the company’s financial practices.

The new requirements for PBO donations reflect a shared commitment to social transformation in South Africa. As the challenges persist, so too does the unwavering dedication of PBOs, companies, and individuals to make a difference.

By embracing these changes, we fortify the vital work of PBOs and lay the foundation for a more equitable and prosperous future for all.

Related articles