(2) For the purposes of this section “assessed loss” means any amount by which the deductions admissible under section 11 exceeded the income in respect of which they are so admissible.
“Relative” definition of section 20A of ITA
(b) ‘relative’ in relation to a person means a spouse, parent, child, stepchild, brother, sister, grandchild or grandparent of that person.
“Assessed loss” definition of section 20A of ITA
(10) For the purposes of this section-
(a) ‘assessed loss’ means ‘assessed loss’ as defined in section 20(2); and
Section 20A (ITA) – Ring-fencing of assessed losses of certain trades
20A. Ring-fencing of assessed losses of certain trades
(1) Subject to subsection (3), where the circumstances in subsection (2) apply during any year of assessment in respect of any trade carried on by a natural person, any assessed loss incurred during that year in carrying on that trade may not be set off against any income of that person derived during that year otherwise than from carrying on that trade, notwithstanding section 20(1)(b).
(2) Subsection (1) applies where the taxable income of a person for a year of assessment, determined without having regard to the other provisions of this section and before setting off any assessed loss and balance of assessed loss in terms of section 20, equals or exceeds the amount at which the marginal rate of tax of 39 per cent chargeable in respect of the taxable income of individuals becomes applicable, and where-
(a) that person has, during the five year period ending on the last day of that year of assessment, incurred an assessed loss in at least three years of assessment in carrying on the trade contemplated in subsection (1) (before taking into account any balance of assessed loss carried forward); or
(b) the trade contemplated in subsection (1), in respect of which the assessed loss was incurred constitutes-
(i) any sport practised by that person or any relative;
(ii) any dealing in collectibles by that person or any relative;
(iii) the rental of residential accommodation, unless at least 80 per cent of the residential accommodation is used by persons who are not relatives of that person for at least half of the year of assessment;
(iv) the rental of vehicles, aircraft or boats as defined in the Eighth Schedule, unless at least 80 per cent of the vehicles, aircraft or boats are used by persons who are not relatives of that person for at least half of the year of assessment;
(v) animal showing by that person or any relative;
(vi) farming or animal breeding, unless that person carries on farming or animal breeding on a full-time basis;
[Subparagraph (vi) substituted by section 19(1)(b) of Act 5 of 2026 effective on 1 March, 2026 and applicable in respect of years of assessment commencing on or after that date]
(vii) any form of performing or creative arts practised by that person or any relative;
[Subparagraph (vii) amended by section 37 of Act 23 of 2018 effective on 17 January 2019]
(viii) any form of gambling or betting practised by that person or any relative; or
[Subparagraph (viii) amended by section 37 of Act 23 of 2018 effective on 17 January 2019]
(ix) the acquisition or disposal of any crypto asset.
[Subparagraph (ix) added by section 37 of Act 23 of 2018 and substituted by section 23 of Act 23 of 2020]
[Subsection (2) amended by section 27(1) of Act 31 of 2005 and by section 19(1)(a) of Act 5 of 2026 effective on 1 March, 2026 and applicable in respect of years of assessment commencing on or after that date]
(3) The provisions of subsection (1) do not apply in respect of an assessed loss incurred by a person during any year of assessment from carrying on any trade contemplated in subsection (2)(a) or (b), where that trade constitutes a business in respect of which there is a reasonable prospect of deriving taxable income (other than taxable capital gain) within a reasonable period having special regard to-
(a) the proportion of the gross income derived from that trade in that year of assessment in relation to the amount of the allowable deductions incurred in carrying on that trade during that year;
(b) the level of activities carried on by that person or the amount of expenses incurred by that person in respect of advertising, promoting or selling in carrying on that trade;
(c) whether that trade is carried on in a commercial manner, taking into account-
(i) the number of full-time employees appointed for purposes of that trade (other than persons partly or wholly employed to provide services of a domestic or private nature);
(ii) the commercial setting of the premises where the trade is carried on;
(iii) the extent of the equipment used exclusively for purposes of carrying on that trade; and
(iv) the time that the person spends at the premises conducting that business;
(d) the number of years of assessment during which assessed losses were incurred in carrying on that trade in relation to the period from the date when that person commenced carrying on that trade and taking into account-
(i) any unexpected events giving rise to any of those assessed losses; and
(ii) the nature of the business involved;
(e) the business plans of that person and any changes thereto to ensure that taxable income is derived in future from carrying on that trade; and
(f) the extent to which any asset attributable to that trade is used, or is available for use, by that person or any relative of that person for recreational purposes or personal consumption.
(4) Subsection (3) does not apply in respect of a trade contemplated in subsection (2)(b) (other than farming) carried on by a person during any year of assessment where that person has, during the 10 year period ending on the last day of that year of assessment, incurred an assessed loss in at least six years of assessment in carrying on that trade (before taking into account any balance of assessed loss carried forward).
[Subsection (4) substituted by section 23 of Act 34 of 2019]
(5) Notwithstanding section 20(1)(a), any balance of assessed loss carried forward from the preceding year of assessment, which is attributable to an assessed loss in respect of which subsection (1) applied in that preceding year or any prior year of assessment, may not be set off against any income derived by that person otherwise than from carrying on the trade contemplated in subsection (1).
(6) For the purposes of this section and section 20, the income derived from any trade referred to in subsections (1) or (5), includes any amount-
(a) which is included in the income of that person in terms of section 8 in respect of an amount deducted in any year of assessment in carrying on that trade; or
(b) derived from the disposal after cessation of that trade of any assets used in carrying on that trade.
(7) Notwithstanding anything to the contrary contained in this Act, all farming activities carried on by a person shall be deemed to constitute a single trade carried on by that person for the purposes of this section.
(8) Where the provisions of subsection (2) apply during any year of assessment in respect of any trade carried on by a person, that person must indicate the nature of the business in his or her return contemplated in section 66 for that year of assessment.
(9) For the purposes of subsections (2)(a) and (4), any assessed loss incurred in any year of assessment ending on or before 29 February 2004 shall not be taken into account.
Subsections 2, 3, 4, 5, 6, 7 and 8 of section 19 of ITA
(2) Subject to subsection (8), this section applies where-
(a) a debt benefit in respect of a debt owed by a person arises in respect of a year of assessment by reason or as a result of a concession or compromise in respect of that debt during that year of assessment; and
[Paragraph (a) substituted by section 36 of Act 23 of 2018 effective on 1 January 2018 and applies in respect of years of assessment commencing on or after that date]
(b) the amount of that debt is owed by that person in respect of or was used by that person to fund, directly or indirectly, any expenditure in respect of which a deduction or allowance was granted in terms of this Act.
[Paragraph (b) substituted by section 36 of Act 23 of 2018 effective on 1 January 2018 and applies in respect of years of assessment commencing on or after that date]
(3) Where-
(a) a debt benefit arises in respect of a debt owed by a person as contemplated in subsection (2); and
(b) the amount of that debt is owed in respect of or was used as contemplated in paragraph (b) of that subsection to fund expenditure incurred in respect of trading stock that is held and not disposed of by that person at the time the debt benefit arises,
[Paragraph (b) substituted by section 36 of Act 23 of 2018 effective on 1 January 2018 and applies in respect of years of assessment commencing on or after that date]
the debt benefit in respect of that debt must, to the extent that an amount is taken into account by that person in respect of that trading stock in terms of section 11(a) or 22(1) or (2) for the year of assessment in which the debt benefit arises, be applied to reduce the amount so taken into account in respect of that trading stock.
(4) Where-
(a) a debt benefit arises in respect of a debt owed by a person as contemplated in subsection (2);
(b) the amount of that debt is owed in respect of or was used as contemplated in paragraph (b) of that subsection to fund expenditure incurred in respect of trading stock that is held and not disposed of by that person at the time the debt benefit arises, and
[Paragraph (b) substituted by section 36 of Act 23 of 2018 effective on 1 January 2018 and applies in respect of years of assessment commencing on or after that date]
(c) subsection (3) has been applied to reduce an amount taken into account by that person in respect of trading stock as contemplated in that subsection to the full extent of that amount so taken into account,
the debt benefit in respect of that debt, less any amount of that debt benefit that has been applied to reduce an amount as contemplated in subsection (3) must, to the extent that a deduction or allowance was granted in terms of this Act to that person in respect of that expenditure, be deemed, for the purposes of section 8(4)(a), to be an amount that has been recovered or recouped by that person for the year of assessment in which the debt benefit arises.
(5) Where-
(a) a debt benefit arises in respect of a debt owed by a person as contemplated in subsection (2); and
(b) the amount of that debt is owed in respect of or was used as contemplated in paragraph (b) of that subsection to fund expenditure other than expenditure incurred—
(i) in respect of trading stock that is held and not disposed of by that person at the time the debt benefit arises; or
(ii) in respect of an allowance asset,
[Paragraph (b) amended by section 36(1)(g) of Act 23 of 2018 deemed effective on 1 January, 2018 and applicable in respect of years of assessment commencing on or after that date]
the debt benefit in respect of that debt must, to the extent that a deduction or allowance was granted in terms of this Act to that person in respect of that expenditure, be deemed, for the purposes of section 8(4)(a), to be an amount that has been recovered or recouped by that person for the year of assessment in which the debt benefit arises.
(6) Where-
(a) a debt benefit arises in respect of a debt owed by a person as contemplated in subsection (2); and
(b) the amount of that debt is owed in respect of or was used as contemplated in paragraph (b) of that subsection to fund expenditure incurred in respect of an allowance asset that was not disposed of in a year of assessment prior to that in which that debt benefit arises,
[Paragraph (b) substituted by section 36(1)(h) of Act 23 of 2018 deemed effective on 1 January, 2018 and applicable in respect of years of assessment commencing on or after that date]
the debt benefit in respect of that debt must, to the extent that-
(i) a deduction or allowance was granted in terms of this Act to that person in respect of that expenditure; and
(ii) the debt benefit has not been applied as contemplated in paragraph 12A of the Eighth Schedule to reduce the amount of expenditure as contemplated in paragraph 20 of that Schedule in respect of that allowance asset,
be deemed, for the purposes of section 8(4)(a), to be an amount that has been recovered or recouped by that person for the year of assessment in which the debt benefit arises.
(6A) Where-
(a) a debt benefit arises during any year of assessment in respect of a debt owed by a person as contemplated in subsection (2); and
(b) the amount of that debt is owed in respect of or was used as contemplated in paragraph (b) of that subsection to fund expenditure incurred in respect of an allowance asset that was disposed of in a year of assessment prior to that in which that debt benefit arises,
that person must treat the debt benefit in respect of that debt to the extent that—
(i) a deduction or allowance was granted in terms of this Act to that person in respect of that expenditure; and
(ii) that debt benefit has not been applied as contemplated in paragraph 12A of the Eighth Schedule to reduce the amount of expenditure as contemplated in paragraph 20 of that Schedule in respect of the allowance asset,
less any amount, if any, previously determined in respect of that disposal as a recovery or recoupment of a deduction or allowance, as an amount recovered or recouped for purposes of section 8(4)(a) in the year of assessment in which that debt benefit arises.
[Subsection (6A) inserted by section 36(1)(i) of Act 23 of 2018 and substituted by section 10(1) of Act 20 of 2022 effective on 1 January, 2023 and applicable in respect of years of assessment commencing on or after that date]
(7) Where a debt benefit arises in respect of a debt owed by a person that was used to fund expenditure incurred in respect of an allowance asset, the aggregate amount of the deductions and allowances allowable to that person in respect of that allowance asset may not exceed an amount equal to the aggregate of the expenditure incurred in the acquisition of that allowance asset, reduced by an amount equal to the sum of-
(a) the debt benefit in respect of that debt; and
(b) the aggregate amount of all deductions and allowances previously allowed to that person in respect of that allowance asset.
(8) This section must not apply to a debt benefit in respect of any debt owed by a person-
(a) that is an heir or legatee of a deceased estate, to the extent that-
(i) the debt is owed to that deceased estate;
(ii) the debt is reduced by the deceased estate; and
(iii) the amount by which the debt is reduced by the deceased estate forms part of the property of the deceased estate for the purposes of the Estate Duty Act;
(b) to the extent that the debt is reduced by way of-
(i) a donation as defined in section 55(1); or
(ii) any transaction to which section 58 applies,
in respect of which donations tax is payable;
[Paragraph (b) substituted by section 36(1)(j) of Act 23 of 2018 and amended by section 17(1)(b) of Act 20 of 2021]
(c) to an employer of that person, to the extent that the debt is reduced in the circumstances contemplated in paragraph 2(h) of the Seventh Schedule;
(d) to another person where the person that owes that debt is a company if-
(i) that company owes that debt to a company that forms part of the same group of companies as that company; and
(ii) that company has not carried on any trade,
during the year of assessment in which that debt benefit arises as well as during the immediately preceding year of assessment: Provided that this paragraph must not apply in respect of any debt-
(aa) incurred, directly or indirectly by that company to fund expenditure incurred in respect of any asset that is disposed of by that company, before or after that debt benefit arises, by way of an asset-for-share, intra-group or amalgamation transaction or a liquidation distribution in respect of which the provisions of section 42, 44, 45 or 47, as the case may be, applied; or;
[Subparagraph (aa) substituted by section 23(1)(a) of Act 17 of 2023 with effect from 1 January, 2024 and applicable in respect of years of assessment commencing on or after that date]
(bb) incurred or assumed by that company in order to settle, take over, refinance or renew, directly or indirectly, any debt incurred by-
(A) any other company that forms part of the same group of companies; or
(B) any company that is a controlled foreign company in relation to any company that forms part of the same group of companies;
[Paragraph (d) amended by section 36 of Act 23 of 2018 effective on 1 January 2018, applies in respect of years of assessment commencing on or after that date]
: Provided further that where a debt benefit arises prior to the disposal of the asset, that debt benefit must be treated as a debt benefit that arose immediately before that disposal;
[Paragraph (d) amended by section 36(1)(k) of Act 23 of 2018 and by section 23(1)(b) of Act 17 of 2023 with effect from 1 January, 2024 and applicable in respect of years of assessment commencing on or after that date]
(e) to another person where the person that owes that debt is a company that-
(i) owes that debt to a company that forms part of the same group of companies as that company; and
(ii) reduces or settles that debt, directly or indirectly, by means of shares issued by that company:
Provided that this paragraph must not apply in respect of any debt that was incurred or assumed by that company in order to settle, take over, refinance or renew, directly or indirectly, any debt incurred by another company which-
(aa) did not form part of that same group of companies at the time that that other company incurred that debt; or
(bb) does not form part of that same group of companies at the time that that company reduces or settles that debt, directly or indirectly, by means of shares issued by that company; or
[Paragraph (e) amended by section 36 of Act 23 of 2018 effective on 1 January 2018, applies in respect of years of assessment commencing on or after that date]
(f) to the extent that the debt so owed-
(i) is settled by means of an arrangement described in paragraph (b) of the definition of ‘concession or compromise’; and
(ii) does not consist of or represent an amount owed by that person in respect of any interest as defined in section 24J incurred by that person during any year of assessment.
[Paragraph (f) added by section 36(1)(k) Act 23 of 2018 deemed effective on 1 January, 2018 and applicable in respect of years of assessment commencing on or after that date. Subparagraph (ii) substituted by section 17(1)(c) of Act 20 of 2021 effective on 1 January, 2022 and applicable in respect of years of assessment commencing on or after that date]
[Section 19 amended by section 15 of Act 90 of 1962, by section 6 of Act 6 of 1963, by section 17 of Act 88 of 1965, by section 17(1) of Act 88 of 1971, by section 14(1) of Act 90 of 1972, by section 18 of Act 85 of 1974, by section 14 of Act 104 of 1980, by section 17 of Act 96 of 1981, by section 15(1) of Act 91 of 1982, by section 17(1) of Act 94 of 1983, by section 17 of Act 121 of 1984, by section 12(1) of Act 96 of 1985, by section 12 of Act 65 of 1986, by section 4(1) of Act 108 of 1986, by section 13 of Act 85 of 1987, by section 18(1) of Act 101 of 1990, by section 21 of Act 129 of 1991, by section 33 of Act 30 of 1998, repealed by section 25(1) of Act 30 of 2000, inserted by section 36(1) of Act 22 of 2012, amended by section 53(1)(a)-(h) of Act 31 of 2013, by section 30 of Act 43 of 2014 and by section 35 of Act 25 of 2015 and substituted by section 32(1) of Act 17 of 2017 with effect from 1 January, 2018 and applicable in respect of years of assessment commencing on or after that date. Paragraph (f) added by section 36(1)(k) Act 23 of 2018 effective on 1 January, 2018 and applicable in respect of years of assessment commencing on or after that date. Subparagraph (ii) substituted by section 17(1)(c) of Act 20 of 2021 with effect from 1 January, 2022 and applicable in respect of years of assessment commencing on or after that date]
“Debt benefit” definition of section 19 of ITA
‘debt benefit’, in respect of a debt owed by a person to another person, means-
(a) in the case of an arrangement described in paragraph (a) (i) of the definition of ‘concession or compromise’, the amount cancelled or waived;
(b) in the case of the extinction of that debt by means of an arrangement described in paragraph (a)(ii) of the definition of ‘concession or compromise’, the amount by which the face value of the claim in respect of that debt held by the person to whom the debt is owed prior to the entering into of that arrangement exceeds the expenditure incurred in respect of-
(i) the redemption of that debt; or
(ii) the acquisition of the claim in respect of that debt;
(c) in the case of the settling of that debt by means of an arrangement described in paragraph (b) of the definition of ‘concession or compromise’, where the person who acquired shares in a company in terms of that arrangement did not hold an effective interest in the shares of that company prior to the entering into of that arrangement, the amount by which the face value of the claim held in respect of that debt prior to the entering into of that arrangement exceeds the market value of the shares acquired by reason or as a result of the implementation of that arrangement; or
(d) in the case of the settling of that debt by means of an arrangement described in paragraph (b) of the definition of ‘concession or compromise’, where the person who acquired shares in a company in terms of that arrangement held an effective interest in the shares of that company prior to the entering into of that arrangement, the amount by which the face value of the claim held in respect of that debt prior to the entering into of that arrangement exceeds the amount by which the market value of any effective interest held by that person in the shares of that company immediately after the implementation of that arrangement exceeds, solely as a result of the implementation of that arrangement, the market value of the effective interest held by that person in the shares of that company immediately prior to the entering into of that arrangement;
[Definition of “debt benefit” substituted by section 36 of Act 23 of 2018 effective on 1 January 2018, applies in respect of years of assessment commencing on or after that date]
“Debt” definition of section 19 of ITA
‘debt’ means any amount that is owed by a person in respect of-
(a) expenditure incurred by that person; or
(b) a loan, advance or credit that was used, directly or indirectly, to fund any expenditure incurred by that person,
but does not include a tax debt as defined in section 1 of the Tax Administration Act;
[Definition of “debt” substituted by section 36 of Act 23 of 2018 effective on 1 January 2018, applies in respect of years of assessment commencing on or after that date]
“Capital asset” definition of section 19 of ITA
‘capital asset’ means an asset as defined in paragraph 1 of the Eighth Schedule that is not trading stock;
Section 19 (ITA) – Concession or compromise in respect of a debt
19. Concession or compromise in respect of a debt
(1) For the purposes of this section-
Section 18A (ITA) – Deductions of donations to certain organisations
18A. Deduction of donations to certain organisations
(1) Notwithstanding the provisions of section 23, there shall be allowed to be deducted in the determination of the taxable income of any taxpayer so much of the sum of any bona fide donations by that taxpayer in cash or of property made in kind, which was actually paid or transferred during the year of assessment to—
[Subsection (1) amended by section 20(a) and (d) of Act 30 of 2002, by section 34(1)(a) and (e) of Act 45 of 2003, by section 18 of Act 8 of 2007, by section 34(1)(b) of Act 60 of 2008, by section 44(1) of Act 24 of 2011 and by section 22 of Act 34 of 2019]
(a) any-
(i) public benefit organisation contemplated in paragraph (a)(i) of the definition of ‘public benefit organisation’ in section 30(1) approved by the Commissioner under section 30; or
(ii) institution, board or body contemplated in section 10(1)(cA)(i),
which-
(aa) carries on in the Republic any public benefit activity contemplated in Part II of the Ninth Schedule, or any other activity determined from time to time by the Minister by notice in the Gazette for the purposes of this section;
(bb) complies with the requirements contemplated in subsection (1C), if applicable, and any additional requirements prescribed by the Minister in terms of subsection (1A); and
(cc) has been approved by the Commissioner for the purposes of this section;
[Paragraph (a) amended by section 20 of Act 30 of 2002, section 34 of Act 45 of 2003 and section 16 of Act 20 of 2006 and substituted by section 31 of Act 17 of 2017 effective on 18 December 2017]
(b) any public benefit organisation contemplated in paragraph (a)(i) of the definition of “public benefit organisation” in section 30(1) approved by the Commissioner under section 30, which provides funds or assets to any public benefit organisation, institution, board or body contemplated in paragraph (a), or any department contemplated in paragraph (c) and which has been approved by the Commissioner for the purposes of this section; or
[Paragraph (b) amended by section 72(1) of Act 59 of 2000, by section 20(c) of Act 30 of 2002, by section 34(1)(d) and (e) of Act 45 of 2003 and by section 26(1)(a) and (b) of Act 31 of 2005 and substituted by section 16(b) of Act 20 of 2006, by section 31 of Act 17 of 2017 and by section 4(a) of Act 24 of 2020]
(bA)
(i) any agency contemplated in the definition of ‘specialized agencies’ in section 1 of the Convention on the Privileges and Immunities of the Specialized Agencies, 1947, set out in Schedule 4 to the Diplomatic Immunities and Privileges Act, 2001 (Act No. 37 of 2001);
(ii) the United Nations Development Programme (UNDP);
(iii) the United Nations Children’s Fund (UNICEF);
(iv) the United Nations High Commissioner for Refugees (UNHCR);
(v) the United Nations Population Fund (UNFPA);
(vi) the United Nations Office on Drugs and Crime (UNODC);
(vii) the United Nations Environmental Programme (UNEP);
(viii) the United Nations Entity for Gender, Equality and the Empowerment of Women (UN Women);
(ix) the International Organisation for Migration (IOM);
(x) the Joint United Nations Programme on HIV of AIDS (UNAIDS);
(xi) the Office of the High Commissioner for Human Rights (OHCHR); or
(xii) the United Nations Office for the Coordination of Humanitarian Affairs (OCHA),
if that agency, programme, fund, High Commissioner, office, entity or organisation-
(aa) carries on in the Republic any public benefit activity contemplated in Part II of the Ninth Schedule, or any other activity determined from time to time by the Minister by notice in the Gazette for the purposes of this section;
(bb) furnishes the Commissioner with a written undertaking that such agency will comply with the provisions of this section;
[Subparagraph (bb) amended by section 4(b) of Act 24 of 2020]
(cc) waives diplomatic immunity for the purposes of subsection (5)(i); and
[Subparagraph (cc) amended by section 4(b) of Act 24 of 2020]
(dd) has been approved by the Commissioner for the purposes of this section; or
[Paragraph (bA) inserted by section 34(1)(a) of Act 60 of 2008 and substituted by section 31 of Act 17 of 2017. Subparagraph (dd) added by section 4(b) of Act 24 of 2020]
(c) any department of government of the Republic in the national, provincial or local sphere as contemplated in section 10(1)(a), which has been approved by the Commissioner for the purposes of this section, to be used for purpose of any activity contemplated in Part II of the Ninth Schedule,
[Paragraph (c) inserted by section 34(1)(b) of Act 45 of 2003 and substituted by section 16(c) of Act 20 of 2006, by section 37(1)(a) of Act 7 of 2010, by section 31 of Act 17 of 2017 and by section 4(c) of Act 24 of 2020]
as does not exceed-
(A) where the taxpayer is a portfolio of a collective investment scheme, an amount determined in accordance with the following formula:
A = B × 0,005
in which formula:
(AA) “A” represents the amount to be determined;
(BB) “B” represents the average value of the aggregate of all of the participatory interests held by investors in the portfolio for the year of assessment, determined by using the aggregate value of all of the participatory interests in the portfolio at the end of each day during that year; or
(B) in any other case, ten per cent of the taxable income (excluding any retirement fund lump sum benefit, retirement fund lump sum withdrawal benefit and severance benefit) of the taxpayer as calculated before allowing any deduction under this section, section 6quat(1C) or setting off a balance of assessed loss under section 20(1)(a)(i) or (ii):
[Paragraph (B) substituted by section 18 of Act 5 of 2026]
Provided that any amount of a donation made as contemplated in this subsection and which has been disallowed solely by reason of the fact that it exceeds the amount of the deduction allowable in respect of the year of assessment shall be carried forward and shall, for the purposes of this section, be deemed to be a donation actually paid or transferred in the next succeeding year of assessment.
[Subsection (1) amended by section 20(a) and (d) of Act 30 of 2002, by section 34(1)(a) and (e) of Act 45 of 2003, by section 18 of Act 8 of 2007, by section 34(1)(b) of Act 60 of 2008, by section 44(1) of Act 24 of 2011, by section 52(1)(a)-(c) of Act 31 of 2013, by section 35(1)(a) of Act 23 of 2018, by section 22 of Act 34 of 2019 and by section 4(c) of Act 24 of 2020]
(1A) The Minister may, by regulation, prescribe additional requirements with which a public benefit organisation, institution, board or body or the department carrying on any specific public benefit activity identified by the Minister in the regulations, must comply before any donation made to that public benefit organisation, institution, board or body or the department shall be allowed as a deduction under subsection (1).
(1B) Any activity determined by the Minister in terms of subsection (1)(a) or any requirements prescribed by the Minister in terms of subsection (1A), must be tabled in Parliament within a period of 12 months after the date of publication by the Minister of that activity or those requirements, as the case may be in the Gazette for incorporation into this Act.
(1C) The constitution or founding document of a public benefit organisation carrying on the activity contemplated in paragraph 4(d) of Part II of the Ninth Schedule, must expressly provide that the organisation-
(a) may not issue any receipt contemplated in subsection (2) in respect of any donation made by a person to that public benefit organisation, unless-
(i) that donation is made by that person on or after 1 August 2002; and
(ii) that person (in the case of a company, together with any other company in the same group of companies as that company) has during the relevant year of assessment of that person donated an amount of at least R1 million to that organisation;
(b) must ensure that every donation contemplated in paragraph (a), in respect of which such a receipt has been issued, will be matched by a donation to that organisation of the same amount made by a person who is not a resident and which is made from funds generated and held outside the Republic; and
(c) must utilise the amount of-
(i) all donations contemplated in paragraph (a), in respect of which such a receipt has been issued, and all income derived therefrom, in the Republic in carrying on that activity; and
(ii) all donations contemplated in paragraph (b), either in the Republic in carrying on that activity, or in respect of a transfrontier conservation area of which the Republic forms part.
(2) Any claim for a deduction in respect of any donation under subsection (1) shall not be allowed unless supported by-
(a) a receipt issued by the public benefit organisation, institution, board, body or agency, programme, fund, High Commissioner, office, entity or organisation or the department concerned, containing-
[Words preceding subparagraph (i) substituted by section 35 of Act 23 of 2018 effective on 1 March 2017]
(i) the reference number of the public benefit organisation, institution, board, body or agency, programme, fund, High Commissioner, office, entity or organisation or the department issued by the Commissioner for the purposes of this section;
[Subparagraph (i) substituted by section 35 of Act 23 of 2018 effective on 17 January 2019]
(ii) the date of the receipt of the donation;
(iii) the name of the public benefit organisation, institution, board, body or agency, programme, fund, High Commissioner, office, entity or organisation or the department which received the donation, together with an address to which enquiries may be directed in connection therewith;
[Subparagraph (iii) substituted by section 35 of Act 23 of 2018 effective on 17 January 2019]
(iv) the name and address of the donor;
(v) the amount of the donation or the nature of the donation (if not made in cash);
(vi) a certification to the effect 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 object of the public benefit organisation, institution, board, body or agency, programme, fund, High Commissioner, office, entity or organisation concerned or, in the case of a department in carrying on the relevant public benefit activity; and
[Subparagraph (vi) substituted by section 35(1)(c) of Act 23 of 2018 and amended by section 2 of Act 21 of 2021]
(vii) such further information as the Commissioner may prescribe by public notice; or
[Paragraph (a) substituted by section 37(1)(d) of Act 7 of 2010 and amended by section 35(1)(b) of Act 23 of 2018 deemed effective on 1 March, 2017. Subparagraph (vii) added by section 2 of Act 21 of 2021]
(b) an employees’ tax certificate as defined in the Fourth Schedule on which the amount of donations contemplated in paragraph 2(4)(f) of that Schedule, for which the employer has received a receipt contemplated in paragraph (a), is given.
(2A) A public benefit organisation, institution, board, body or department may only issue a receipt contemplated in subsection (2) in respect of any donation to the extent that-
(a) in the case of a public benefit organisation, institution, board or body contemplated in subsection (1)(a) which carries on activities contemplated in Parts I and II of the Ninth Schedule, that donation will be utilised solely in carrying on activities contemplated in Part II of the Ninth Schedule;
(b) in the case of a public benefit organisation contemplated in subsection (1)(b) –
(i) that organisation will within 12 months after the end of the relevant year of assessment distribute or incur the obligation to distribute at least 50 per cent of all funds received by way of donation during that year in respect of which receipts were issued: Provided that the Commissioner may, upon good cause shown and subject to such conditions as he or she may determine, either generally or in a particular instance, waive, defer or reduce the obligation to distribute any funds, having regard to the public interest and the purpose for which the relevant organisation wishes to accumulate those funds; and
[Words preceding the proviso substituted by section 29 of Act 43 of 2014 effective on 1 March 2015]
(ii) which provides funds or assets to public benefit organisations, institutions, boards or bodies or any department that carry on public benefit activities contemplated in Parts I and II of the Ninth Schedule, that donation will be utilised solely to provide funds or assets to a public benefit organisation, institution, board or body contemplated in subsection (1)(a), which will utilise those funds or assets solely in carrying on activities contemplated in Part II of the Ninth Schedule or to any department contemplated in subsection (1)(c) which will utilise those funds or assets solely for the purpose of any activity contemplated in Part II of the Ninth Schedule; or
[Paragraph (b) substituted by section 26(1)(d) of Act 31 of 2005 effective on 1 April, 2006 and applicable in respect of any year of assessment of a public benefit organisation commencing on or after that date. Subparagraph (ii) substituted by section 4(d) of Act 24 of 2020]
(c) in the case of a department, that donation will be utilised solely in carrying on activities contemplated in Part II of the Ninth Schedule.
(2B) A public benefit organisation, institution, board or body contemplated in subsection (2A), must obtain and retain a certificate containing such information as the Commissioner may prescribe by public notice and confirming the reasonable satisfaction of a registered tax practitioner that all donations received or accrued in that year of assessment in respect of which receipts were issued in terms of subsection (2), were utilised in the manner contemplated in subsection (2A).
[Subsection (2B) inserted by section 34(1)(k) of Act 45 of 2003 and substituted by section 6(1) of Act 4 of 2008 and by section 3(a) of Act 4 of 2026]
(2C) The accounting officer or accounting authority contemplated in the Public Finance Management Act or an accounting officer contemplated in the Local Government: Municipal Finance Management Act, 2003 (Act 56 of 2003), as the case may be, for the department which issued any receipts in terms of subsection (2), must on an annual basis submit a certificate to the Commissioner containing such information as the Commissioner may prescribe by public notice and confirming the reasonable satisfaction of the officer or authority that all donations received or accrued in the financial year in respect of which receipts were so issued, were utilised in the manner contemplated in subsection (2A).
[Subsection (2C) inserted by section 34(1)(k) of Act 45 of 2003 and substituted by section 16(k) of Act 20 of 2006, by section 37(1)(g) of Act 7 of 2010, by section 52(1)(d) of Act 31 of 2013, by section 2 of Act 33 of 2019 and by section 3(a) of Act 4 of 2026]
(2D) Any public benefit organisation contemplated in subsection (1)(b), in respect of any amount that is not distributed as required by subsection (2A)(b)(i), shall distribute or incur the obligation to distribute all amounts received in respect of investment assets held by it, other than amounts received in respect of disposals of those investment assets to any public benefit organisation, institution, board or body contemplated in subsection (1)(a) or to any department contemplated in subsection (1)(c), no later than six months after—
(a) every five years from the date on which the Commissioner issued a reference number referred to in subsection (2)(a)(i) to that public benefit organisation referred to in subsection (1)(b), if that public benefit organisation is incorporated, formed or established on or after 1 March 2015; or
(b) every five years from 1 March 2015, if that public benefit organisation referred to in subsection (1)(b) was incorporated, formed or established and issued with a reference number referred to in subsection (2)(a)(i) prior to 1 March 2015.
[Subsection (2D) inserted by section 29(1)(b) of Act 43 of 2014 and amended by section 4(e) of Act 24 of 2020]
(3) If any deduction is claimed by any taxpayer under the provisions of subsection (1) in respect of any donation of property in kind, other than immovable property of a capital nature where the lower of market value or municipal value exceeds cost, the amount of such deduction shall be deemed to be an amount equal to-
(a) where such property constitutes-
(i) a financial instrument which is trading stock of the taxpayer, the lower of fair market value of that financial instrument on the date of that donation or the amount which has been taken into account for the purposes of section 22(8)(C); or
(ii) any other trading stock of the taxpayer (including any livestock or produce in respect of which the provisions of paragraph 11 of the First Schedule are applicable), the amount which has been taken into account for the purposes of section 22(8)(C) or, in the case of such livestock or produce, the said paragraph 11, in relation to the donation of such property; or
(b) where such property (other than trading stock) constitutes an asset used by the taxpayer for the purposes of his trade, the lower of-
(i) the fair market value of that property on the date of that donation; or
(ii) the cost to the taxpayer of such property less any allowance (other than any investment allowance) allowed to be deducted from the income of the taxpayer under the provisions of this Act in respect of that asset; or
(c) where such property does not constitute trading stock of the taxpayer or an asset used by him for the purposes of his trade, the lower of –
(i) the fair market value of that property on the date of that donation; or
(ii) the cost to the taxpayer of such asset, less, in the case of a movable asset which has deteriorated in condition by reason of use or other causes, a depreciation allowance calculated in the manner contemplated in section 8(5)(bB)(i); or
(d) where such property is purchased, manufactured, erected, assembled, installed or constructed by or on behalf of the taxpayer in order to form the subject of the said donation, the lower of-
(i) the fair market value of that property on the date of that donation; or
(ii) the cost to the taxpayer of such property.
(3A) If any deduction is claimed by any taxpayer under the provisions of subsection (1) in respect of any donation of immovable property of a capital nature where the lower of market value or municipal value exceeds cost, the amount of such deduction shall be determined in accordance with the formula:
A = B + (C x D)
in which formula:
(a) “A” represents the amount deductible in respect of subsection (1);
(b) “B” represents the cost of the immovable property being donated;
(c) “C” represents the amount of a capital gain (if any), that would have been determined in terms of the Eighth Schedule had the immovable property been disposed of for an amount equal to the lower of market value or municipal value on the day the donation is made; and
[Paragraph (c) substituted by section 22 of Act 23 of 2020]
(d) ‘D’ represents 60 per cent in the case of a natural person or special trust or 20 per cent in any other case.
[Paragraph (d) substituted by section 35 of Act 23 of 2018 effective on 17 January 2019]
(3B) No deduction shall be allowed under this section in respect of the donation of any property in kind which constitutes, or is subject to any fiduciary right, usufruct or other similar right, or which constitutes an intangible asset or financial instrument, unless that financial instrument is-
(a) a share in a listed company; or
(b) issued by an eligible financial institution as defined in section 1 of the Financial Sector Regulation Act.
[Paragraph (b) substituted by section 29 of Act 43 of 2014 and section 35 of Act 23 of 2018 effective on 1 April 2018]
(4) The provisions of section 30(10) shall apply mutatis mutandis in respect of any institution, board or body contemplated in subsection (1) (a).
[Subsection (4) substituted by section 3 of Act 44 of 2014 effective on 20 January 2015]
(5) If the Commissioner has reasonable grounds for believing that any person who is in a fiduciary capacity responsible for the management or control of the income or assets of any public benefit organisation, institution, board, body or agency, programme, fund, High Commissioner, office, entity or organisation (other than an institution, board or body in respect of which subsection (5B) applies) has-
(a) in any material way failed to ensure that the objects for which the public benefit organisation, institution, board, body or agency, programme, fund, High Commissioner, office, entity or organisation was established are carried out or has expended moneys belonging to the public benefit organisation, institution, board, body or agency, programme, fund, High Commissioner, office, entity or organisation for purposes not covered by such objects;
(b) issued or allowed a receipt to be issued to any taxpayer for the purposes of this section in respect of any fees or other emoluments payable to that organisation, institution, board, body or agency, programme, fund, High Commissioner, office, entity or organisation by that taxpayer;
[Paragraph (b) amended by section 4(f) of Act 24 of 2020]
(c) issued or allowed a receipt to be issued in contravention of subsection (2A) or utilised a donation in respect of which a receipt was issued for any purpose other than the purpose contemplated in that subsection; or
[Paragraph (c) amended by section 4(f) of Act 24 of 2020 and by section 3(b) of Act 4 of 2026]
(d) failed to obtain and retain a certificate as contemplated in subsection (2B).
[Paragraph (d) added by section 4(f) of Act 24 of 2020 and substituted by section 3(c) of Act 4 of 2026]
(e) . . . . . .
[Paragraph (e) added by section 4(f) of Act 24 of 2020 and deleted by section 3(d) of Act 4 of 2026]
the Commissioner may by notice in writing addressed to that person direct that-
(i) any donation in respect of which a receipt was issued by that public benefit organisation, institution, board, body or agency, programme, fund, High Commissioner, office, entity or organisation during any year of assessment specified in that notice, will be deemed to be taxable income of that public benefit organisation, institution, board, body or agency, programme, fund, High Commissioner, office, entity or organisation in that year; and
(ii) if corrective steps are not taken by that public benefit organisation, institution, board, body or agency, programme, fund, High Commissioner, office, entity or organisation within a period stated by the Commissioner in that notice, any receipt issued by that public benefit organisation, institution, board, body or agency, programme, fund, High Commissioner, office, entity or organisation in respect of any donation made on or after the date specified in that notice shall not qualify as a valid receipt for purposes of subsection (2).
[Subsection (5) substituted by section 26 of Act 31 of 2005, section 34 of Act 60 of 2008 and section 35 of Act 23 of 2018 effective on 17 January 2019]
(5A) If the Commissioner has reasonable grounds for believing that any regulating or co-ordinating body of a group of public benefit organisations, institutions, boards or bodies contemplated in section 30(3A) or subsection (6) fails to –
(a) take any steps contemplated in section 30(3A) or subsection (6), to exercise control over any public benefit organisation, institution, board or body in that group; or
(b) notify the Commissioner where it becomes aware of any material failure by any public benefit organisation, institution. board or body over which it exercises control to comply with any provision of this section,
the Commissioner may by notice in writing addressed to that regulating or co-ordinating body direct that if corrective steps are not taken by that regulating or co-ordinating body within a period stated by the Commissioner in that notice, any receipt issued by public benefit organisations, institutions, boards or bodies in that group in respect of any donation made on or after the date specified in that notice shall not qualify as a valid receipt for purposes of subsection (2).
(5B) If the Commissioner has reasonable grounds for believing that any accounting officer or accounting authority contemplated in the Public Finance Management Act or an accounting officer contemplated in the Local Government: Municipal Finance Management Act, 2003 (Act 56 of 2003), as the case may be, for any institution, board, body or department in respect of which those Acts apply, has issued or allowed a receipt to be issued in contravention of subsection (2A) or utilised a donation in respect of which a receipt was issued for any purpose other than the purpose contemplated in that subsection, and in the case of a department has not submitted a certificate contemplated in subsection (2C), the Commissioner-
(a) must notify the National Treasury and the Provincial Treasury (if applicable) of the contravention; and
(b) may by notice in writing addressed to that accounting officer or accounting authority direct that, if corrective steps are not taken by that accounting officer or accounting authority within a period stated by the Commissioner in that notice, any receipt issued by that institution in respect of any donation made on or after the date specified in that notice shall not qualify as a valid receipt for purposes of subsection (2).
[Subsection (5B) inserted by section 26(1)(g) of Act 31 of 2005 and amended by section 52(1)(h) of Act 31 of 2013 and by section 3(e) of Act 4 of 2026]
(5C) If any public benefit organisation contemplated in subsection (1)(b), has not distributed amounts as contemplated in subsection (2D), or has not incurred the obligation to distribute those amounts received in respect of investment assets held by it, those amounts shall be deemed to be taxable income of that public benefit organisation in that year of assessment.
[Subsection (5C) inserted by section 29 of Act 43 of 2014 and substituted by section 34 of Act 25 of 2015 effective on 8 January 2016]
(6) The Commissioner may, for the purposes of this section, approve a group of institutions, boards or bodies contemplated in subsection (1)(a)(ii), 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 institutions, boards or bodies in order to ensure that they comply with the provisions of this section.
(7) Any person who is-
(i) in a fiduciary capacity responsible for the management or control of the income and assets of any public benefit organisation, institution, board or body contemplated in this section; or
(ii) the accounting officer or accounting authority contemplated in the Public Finance Management Act or the Local Government: Municipal Finance Management Act, 2003 (Act No. 56 of 2003), as the case may be, for any institution in respect of which that Act applies,
who intentionally fails to comply with any provisions of this section, or a provision 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.