“policy” means a longterm policy as defined in section 1 of the Longterm Insurance Act, other than a policy issued by a foreign reinsurer conducting insurance business through a branch in the Republic in terms of section 6 of the Insurance Act;
[Definition of “policy” substituted by section 34(b) of Act 34 of 2019]
(2) Any activity determined by the Minister in terms of paragraph (b) of the definition of ‘public benefit activity’ in subsection (1) or any conditions prescribed by the Minister in terms of subsection (3)(a) must be tabled in Parliament within a period of 12 months after the date of publication by the Minister of that activity or those conditions in the Gazette, for incorporation into this Act.
(3) The Commissioner shall, for the purposes of this Act, approve a public benefit organisation which-
(a) complies with such conditions as the Minister may prescribe by way of regulation to ensure that the activities and resources of such organisation are directed in the furtherance of its object;
(b) has submitted to the Commissioner a copy of the constitution, will or other written instrument under which it has been established and in terms of which it is-
(i) required to have at least three natural persons, who are not connected persons in relation to each other, to accept the fiduciary responsibility of such organisation and no single person directly or indirectly controls the decision-making powers relating to that organisation: Provided that the provisions of this subparagraph shall not apply in respect of any trust established in terms of a will of any person;
[Subparagraph (i) substituted by section 22(d) of Act 30 of 2002 and amended by section 53(1)(b) of Act 7 of 2010 and substituted by section 6(a) of Act 18 of 2023]
(ii) prohibited from directly or indirectly distributing any of its funds to any person (otherwise than in the course of undertaking any public benefit activity) and is required to utilise its funds solely for the object for which it has been established;
(iii) in the case of a public benefit organisation contemplated in paragraph (a)(i) of the definition of “public benefit organisation” in subsection (1), required on dissolution to transfer its assets to –
(aa) any public benefit organisation which has been approved in terms of this section;
(bb) any institution, board or body which is exempt from tax under the provisions of section 10(1)(cA)(i), which has as its sole or principal object the carrying on of any public benefit activity;
[Item (bb) amended by section 51 of Act 15 of 2016 1 April 2016, applies in respect of years of assessment commencing on or after that date]
(cc) the government of the Republic in the national, provincial or local sphere, contemplated in section 10(1)(a); or
[Item (cc) substituted by section 53 of Act 7 of 2010, amended by section 51 of Act 15 and 2016 effective on 1 April 2016, applies in respect of years of assessment commencing on or after that date]
(dd) the National Finance Housing Corporation contemplated in section 10(1)(t)(xvii),
[Item (dd) added by section 51 of Act 15 of 2016 effective on 1 April 2016, applies in respect of years of assessment commencing on or after that date]
which is required to use those assets solely for purposes of carrying on one or more public benefit activities;
(iiiA) in the case of a branch of a public benefit organisation contemplated in paragraph (a)(ii) of the definition of ‘public benefit organisation’ in subsection (1), is required on termination of its activities in the Republic to transfer the assets of such branch to any public benefit organisation, institution, board, body, department or administration contemplated in subparagraph (iii), if more than 15 percent of the receipts and accruals attributable to that branch during the period of three years preceding that termination are derived from a source within the Republic;
(iv) ……….
(v) prohibited from accepting any donation which is revocable at the instance of the donor for reasons other than a material failure to conform to the designated purposes and conditions of such donation, including any misrepresentation with regard to the tax deductibility thereof in terms of section 18A: Provided that a donor (other than a donor which is an approved public benefit organisation or an institution board or body which is exempt from tax in terms of section 10(1)(cA)(i), which has as its sole or principal object the carrying on of any public benefit activity) may not impose conditions which could enable such donor or any connected person in relation to such donor to derive some direct or indirect benefit from the application of such donation;
(vi) required to submit to the Commissioner a copy of any amendment to the constitution, will or other written instrument under which it was established;
(c) the Commissioner is satisfied is or was not knowingly a party to, or does not knowingly permit, or has not knowingly permitted, itself to be used as part of any transaction, operation or scheme of which the sole or main purpose is or was the reduction, postponement or avoidance of liability for any tax, duty or levy which, but for such transaction, operation or scheme, would have been or would have become payable by any person under this Act or any other Act administered by the Commissioner;
(d) has not and will not pay any remuneration, as defined in the Fourth Schedule, to any employee, office bearer, member or other person which is excessive, having regard to what is generally considered reasonable in the sector and in relation to the service rendered and has not and will not economically benefit any person in a manner which is not consistent with its objects;
(e) complies with such reporting requirements as may be determined by the Commissioner;
(f) the Commissioner is satisfied that, in the case of any public benefit organisation which provides funds to any association of persons contemplated in paragraph 10(iii) of Part 1 of the Ninth Schedule, has taken reasonable steps to ensure that the funds are utilised for the purpose for which those funds have been provided;
[Paragraph (f) substituted by section 31(1)(a) of Act 74 of 2002 and by section 51(1)(b) of Act 15 of 2016 and amended by section 6(b) of Act 18 of 2023]
(g) ……….
(h) has not and will not use its resources directly or indirectly to support, advance or oppose any political party; and
[Paragraph (h) added by section 22(j) of Act 30 of 2002 and amended by section 6(c) of Act 18 of 2023]
(i) the Commissioner is satisfied, does not have a person acting in a fiduciary capacity, who is disqualified in terms of section 6 of the Trust Property Control Act, 1988 (Act 57 of 1988), section 25A of the Nonprofit Organisations Act, 1997 (Act 71 of 1997), or section 69 of the Companies Act.
[Paragraph (i) added by section 6(d) of Act 18 of 2023]
[Subsection (3) amended by section 22(k) of Act 30 of 2002, by section 36(1)(b) of Act 31 of 2005 effective on 8 November, 2005 and by section 36(1)(c) of Act 31 of 2005 with effect from 1 April, 2006 and applicable in respect of any year of assessment commencing on or after that date]
(3A) The Commissioner may, for the purposes of subsection (3), grant approval in respect of any group of organisations sharing a common purpose, which carry on any public benefit activity under the direction or supervision of a regulating or co-ordinating body, where that body takes such steps, as prescribed by the Commissioner, to exercise control over those organisations in order to ensure that they comply with the provisions of this section.
(3B)
(a) Subject to paragraph (b), where an organisation applies for approval, the Commissioner may approve that organisation for the purposes of this section with retrospective effect, if the Commissioner is satisfied that that organisation during the relevant period prior to its application complied with the requirements of a public benefit organisation as defined in subsection (1).
(b) For the purposes of paragraph (a), where the organisation—
(i) has complied with all its obligations under chapters 4, 10 and 11 of the Tax Administration Act, the Commissioner may not extend approval to the years of assessment in respect of which an assessment may in terms of section 99(1) of that Act not be made; or
(ii) has not complied with all its obligations under chapters 4, 10 and 11 of the Tax Administration Act, the Commissioner may not extend approval to the years of assessment in respect of which an assessment could in terms of section 99(1) of that Act, not have been made had the income tax returns relating to those years of assessment been submitted in accordance with section 25(1) of that Act.
[Subsection (3B) inserted by section 22(l) of Act 30 of 2002 and substituted by section 28(1)(b) of Act 32 of 2004, by section 41(1)(b) of Act 17 of 2009 and by section 35 of Act 34 of 2019]
(3C) Notwithstanding any other provision of this section, the Director of Nonprofit Organisations designated in terms of section 8 of the Nonprofit Organisations Act, 1997 (Act No. 71 of 1997), may, in respect of any organisation that has been convicted of an offence under that Act, request the Commissioner to withdraw the approval of that organisation in terms of subsection (5) and the Commissioner may pursuant to that request withdraw such approval.
(4) Where the constitution, will or other written instrument does not comply with the provisions of subsection (3)(b), it shall be deemed to so comply if the persons contemplated in subsection (3)(b)(i) responsible in a fiduciary capacity for the funds and assets of a branch contemplated in paragraph (a)(ii) of the definition of ‘public benefit organisation’ in subsection (1) or any trust established in terms of a will of any person furnishes the Commissioner with a written undertaking that such organisation will be administered in compliance with the provisions of this section.
[Subsection (4) amended by section 24 of Act 20 of 2006, substituted by section 48 of Act 43 of 2014 effective on 20 January 2015]
(5) Where the Commissioner is-
(a) satisfied that any public benefit organisation approved under subsection (3) has during any year of assessment in any material respect; or
(b) during any year of assessment satisfied that any such public benefit organisation has on a continuous or repetitive basis,
failed to comply with the provisions of this section, or the constitution, will or other written instrument under which it is established to the extent that it relates to the provisions of this section, the Commissioner shall after due notice withdraw approval of the organisation with effect from the commencement of that year of assessment, where corrective steps are not taken by that organisation within a period stated by the Commissioner in that notice.
(5A) Where any regulating or co-ordinating body contemplated in subsection (3A) –
(a) with intent or negligently fails to take any steps contemplated in that subsection to exercise control over any public benefit organisation; or
(b) fails to notify the Commissioner where it becomes aware of any material failure by any public benefit organisation over which it exercises control to comply with any provision of this section,
[Paragraph (b) substituted by section 54 of Act 25 of 2015 effective on 8 January 2016]
the Commissioner shall after due notice withdraw the approval of the group of public benefit organisations with effect from the commencement of that year of a assessment, where corrective steps are not taken by that regulating or co-ordinating body within a period stated by the Commissioner in that notice.
(6) Where the Commissioner has so withdrawn his approval of such organisation, such organisation shall, within six months or such longer period as the Commissioner may allow after the date of such withdrawal, transfer, or take reasonable steps to transfer, its remaining assets to any public benefit organisation, institution, board or body or the government as contemplated in subsection (3)(b)(iii).
(6A) As part of-
(a) the dissolution of an organisation contemplated in paragraph (a)(i) of the definition of ‘public benefit organisation’ in subsection (1); or
(b) the termination of the activities of a branch contemplated in paragraph (a)(ii) of that definition, if more than 15 per cent of the receipts and accruals attributable to that branch during the period of three years preceding that termination are derived from a source within the Republic,
the organisation or branch must transfer its assets to any public benefit organisation, institution, board or body or the government contemplated in subsection (3)(b)(iii).
(7) If the organisation fails to transfer, or to take reasonable steps to transfer, its assets, as contemplated in subsection (6) or (6A), an amount equal to the market value of those assets which have not been transferred, less an amount equal to the bona fide liabilities of the organisation, must for purposes of this Act be deemed to be an amount of taxable income which accrued to such organization during the year of assessment in which approval was withdrawn or the dissolution of the organisation or termination of activities took place.
(8) The provisions of this section shall not, if the Commissioner is satisfied that the non-compliance giving rise to the withdrawal contemplated in subsection (5) has been rectified, preclude any such organisation from applying for approval in terms of this section in the year of assessment following the year of assessment during which the approval was so withdrawn by the Commissioner.
(9) ……….
[Subsection (9) deleted by section 4 of Act 44 of 2014 effectvie on 20 January 2015]
(10) In the application of the provisions of this Act, the Commissioner may by notice in writing require any person whom the Commissioner may deem able to furnish information in regard to any approved public benefit organisation –
(a) to answer any questions relating to such organisation; or
(b) to make available for inspection by the Commissioner or any person appointed by him, any books of account, records or other documents relating to such organisation; or
(c) to attend at the time and place appointed by the Commissioner for the purposes of producing for examination by the Commissioner or any person appointed by him, any books of account, records or other documents relating to such organisation.
(11) Any person who is in a fiduciary capacity responsible for the management or control of the income and assets of any approved public benefit organisation and who intentionally fails to comply with any provision of this section or of the constitution, will or other written instrument under which such organisation is established to the extent that it relates to the provisions of this section, shall be guilty of an offence and liable on conviction to a fine or to imprisonment for a period not exceeding 24 months.
(11A) A person may not act in a fiduciary capacity if that person is disqualified in terms of section 6 of the Trust Property Control Act, 1988 (Act 57 of 1988), section 25A of the Nonprofit Organisations Act, 1997 (Act 71 of 1997), or section 69 of the Companies Act.
[Section 11A inserted by section 6(e) of Act 18 of 2023]
(11B) A person who fails to comply with the provisions of subsection (11A) shall be guilty of an offence and liable, on conviction, to a fine or to imprisonment for a period not exceeding 24 months.
[Section 11B inserted by section 6(e) of Act 18 of 2023]
“storage building”, in relation to any agricultural co–operative, means –
(a) a building which is at any relevant time or during any relevant period wholly or mainly used by such co–operative for storing or packing pastoral, agricultural or other products produced by such co–operative’s members or for carrying on therein any primary process in respect of such products; or
(b) a structure of a permanent nature which is at any relevant time or during any relevant period wholly or mainly used by such co–operative in connection with the fattening of livestock on behalf of the members of such co–operative:
Provided that for the purposes of this definition the members of a central co–operative agricultural company or central farmers’ special co–operative company or federal co–operative agricultural company or federal farmers’ special co–operative company, as defined in the Co–operative Societies Act, 1939, shall be deemed to include the members of any agricultural co–operative which itself is a member of such company.
“owner”, in relation to a policy, means the person who is entitled to enforce any benefit provided for in the policy: Provided that where a policy has been –
(a) ceded or pledged solely for the purpose of providing security for the performance of any obligation, the owner shall be the person who retains the beneficial interest in such policy; or
(b) reinsured by one insurer with another insurer, the reinsurance policy shall be deemed to be owned by the owner of the insurance policy so insured;
(1) For the purposes of this Act-
“public benefit activity” means-
(a) any activity listed in Part I of the Ninth Schedule; and
(b) any other activity determined by the Minister from time to time by notice in the Gazette to be of a benevolent nature, having regard to the needs, interests and well-being of the general public;
“primary process”, in relation to any product produced in the course of pastoral, agricultural or other farming operations, means the first process to which such product is subjected by an agricultural co–operative in order to render such product marketable or to convert such product into a marketable commodity, and includes any further process carried on by such co–operative which is so connected with the said first process that such first process and such further process or processes may be regarded as one process and to be necessary to convert such product into a marketable commodity;
“market value”, in relation to any asset, means-
(a) the amount which a person having the right freely to dispose of such asset might reasonably expect to obtain from a sale of such asset in the open market; or
(b) where an asset cannot be sold in the open market, an amount equal to the value at which that asset is recognised in the audited annual financial statements of the insurer;
[Definition of “market value” substituted by section 30 of Act 23 of 2020]
“public benefit organisation” means any organisation –
(a) which is –
(i) a non-profit company as defined in section 1 of the Companies Act, or a trust or an association of persons that has been incorporated, formed or established in the Republic; or
(ii) any branch within the Republic of any company, association or trust incorporated, formed or established in any country other than the Republic that is exempt from tax on income in that other country;
(b) of which the sole or principal object is carrying on one or more public benefit activities, where –
(i) all such activities are carried on in a non-profit manner and with an altruistic or philanthropic intent;
(ii) no such activity is intended to directly or indirectly promote the economic self-interest of any fiduciary or employee of the organisation, otherwise than by way of reasonable remuneration payable to that fiduciary or employee; and
(c) where –
(i) each such activity carried on by that organisation is for the benefit of, or is widely accessible to, the general public at large, including any sector thereof (other than small and exclusive groups);
“improvements”, in relation to any storage building, means any extension, addition or improvements (other than repairs) to a storage building which is or are effected for the purpose of increasing the capacity of the building for storing or packing pastoral, agricultural or other farm products or for carrying on therein any primary process in respect of any such products;
“insurer” means a company that is licensed under the Insurance Act and is conducting life insurance business as defined in that Act, other than a foreign reinsurer conducting insurance business through a branch in the Republic in terms of section 6 of that Act;
[Definition of “insurer” substituted by section 34(a) of Act 34 of 2019 and by section 22(a) of Act 20 of 2021]