This document has been provided by the
International Center for Not-for-Profit Law (ICNL).

ICNL is the leading source for information on th e legal environment for civil society and public
participation. Since 1992, ICNL has served as a resource to civil society leaders, government
officials, and the donor community in over 90 countries.

Visit ICNL’s Online Library at
https://www.icnl.org/knowledge/library/index.php
for further resources and research from countries all over the world.

Disclaimers Content. The information provided herein is for general informational and educational purposes only. It is not intended and should not be
construed to constitute legal advice. The information contai ned herein may not be applicable in all situations and may not, after the date of
its presentation, even reflect the most current authority. Noth ing contained herein should be relied or acted upon without the benefit of legal
advice based upon the particular facts and circumstances pres ented, and nothing herein should be construed otherwise.
Translations. Translations by ICNL of any materials into other languages are intended solely as a convenience. Translation accuracy is not
guaranteed nor implied. If any questions arise related to the accuracy of a translation, please refer to the original language official version of
the document. Any discrepancies or differences created in the tr anslation are not binding and have no legal effect for compliance or
enforcement purposes.
Warranty and Limitation of Liability. Although ICNL uses reasonable efforts to include ac curate and up-to-date information herein, ICNL
makes no warranties or representations of any kind as to its a ccuracy, currency or completeness. You agree that access to and u se of this
document and the content thereof is at your own risk. ICNL discl aims all warranties of any kind, express or implied. Neither ICNL nor any
party involved in creating, producing or delivering this document shall be liable for any damages whatsoever arising out of access to, use of
or inability to use this document, or any e rrors or omissions in the content thereof.

Income Tax Act
…
Chapter II: The Taxes
Part I: Normal Tax
10. Exemptions

1. There shall be exempt from the tax —
a. the revenues of the Government, any provin cial administration or of any other state;
b. the revenues of local authorities;
c.
i. [Sub-para. (i) deleted by s. 9 (1) (a) of Act No. 21 of 1994] ii. any pension payable to any person or hi s surviving spouse by reason of such
person having occupied the office of St ate President or Vice State President:
Provided that the provisions of this subparagraph shall not apply to any amount
payable to any person or his surviving sp ouse by reason of such person having
occupied the office of President as elected in terms of section 77 of the
Constitution;
iii. the salary and emoluments payable to any person who holds office in the
Republic as an official of any government, other than the Government of the
Republic, provided such person is stati oned in the Republic for that purpose and
is not ordinarily resident in the Republic;
iv. any salary and emoluments payable to any domestic or private servant of any
person referred to in subparagr aph (iii) in respect of domestic or private services
rendered or to be rendered by such servant to such person if such servant is not
a South African citizen and is not or dinarily resident in the Republic;
v. any salary and emoluments payable to any subject of a foreign state who is
temporarily employed in the Republic, prov ided the exemption of such salary and
emoluments is authorized by an agreement entered into by the governments of
such foreign state and the Republic;
(cA) the receipts and accruals of–
i. any institution, board or body (other th an a company registered or deemed to be
registered under the Companies Act, 1973 (Act No. 61 of 1973), or under any law
repealed by that Act and any co-operative formed and incorporated or deemed to
be formed and incorporated under the Cooperatives Act, 1981 (Act No. 91 of
1981), and any close corporation and any trust) established by or under any law
and which, in the furtherance of its sole or principal object–
(aa) conducts scientific, technical or industrial research;
(bb) provides necessary or useful commodities, amenities or services to the
State (including any provincial administrat ion) or members of the general public;
or
(cc) carries on activities (including the rendering of financial assistance by way of

loans or otherwise) designed to promote commerce, industry or agriculture or
any branch thereof;
ii. any South African company all the shares of which are held by any such institution, board
or body, if the operations of such company are ancillary or complementary to the object
of such institution, board or body:
Provided that such institution, board, body or company–
a. has been approved by the Commissioner subj ect to such conditions as he may deem
necessary to ensure that the activities of su ch institution, board, body or company are
wholly or mainly directed to the further ance of its sole or principal object;
b. is by law or under its constitution–
i. not permitted to distribute any of its profit s or gains to any person, other than, in
the case of such company, to its shareholders;
ii. required to utilize its funds solely for in vestment or the object for which it has
been established; and
iii. required on dissolution–
(aa) where the institution, board, body or company is established under any law,
to transfer its assets to some other institution, board or body which has been
granted exemption from tax in terms of this paragraph and which has objects
similar to those of such instit ution, board, body or company; or
(bb) where the institution, board, or body is established by law, to transfer its
assets to–
(A) some other institution, board or bo dy which has been granted exemption from
tax in terms of this paragraph and which has objects similar to those of such
institution, board, body or company; or
(B) to the State:
Provided further that–
a. where the Commissioner is satisfied that any such institution, board, body or company
has during any year of assessment failed to comply with the provisions of this paragraph,
he may withdraw his approval of the instituti on, board, body or company with effect from
the commencement of that year of assessment;
b. where the institution, board, body or company fails to transfer, or take reasonable steps
to transfer, its assets as contemplated in paragraph (b)(ii) of the first proviso, the
accumulated net revenue which has not been distributed shall be deemed for the
purposes of this Act to be an amount of taxabl e income which accrued to such institution,
board, body or company during the year of assessment contemplated in paragraph (a);
and
c. any decision of the Commissioner in the exercise of his discretion under this paragraph
shall be subject to objection and appeal;
(cB) the receipts or accruals of any company, soci ety or other association of persons (including a
trust), whether or not registered under any law (other than a co-operative formed and
incorporated or deemed to be formed and inco rporated under the Co-operatives Act, 1981 (Act
No. 91 of 1981)), if–
i. the sole or principal object of such company, society or association is as follows, namely-
–

(aa) to conduct or promote scientific, technical or industrial research; or
(bb) to provide medical, dental, blood transfusion, hospital or nursing services; or
(cc) to engage in or promote nature conservation or animal protection activities; or
(dd) to engage in or promote activities which the Commissioner is satisfied are of a
cultural nature; or
(ee) to provide social or recreational amenities or facilities for the members of such
company, society or association; or
(ff) to promote the common interests of persons being members of such company,
society or association carrying on any part icular kind of business, profession or
occupation by means other than–
(A) the carrying on by such company, society or association of any trading or other profit-
making activities, or
(B) the participation by such company, society or association in any business, profession
or occupation carried on by any of its members,
(C) or the provision to any of its members of financial assistance or of any premises or
continuous services or facilit ies required by its members for the purpose of carrying on
any business, profession or occupation;
ii. the activities of such company, society or as sociation are wholly or mainly directed to the
furtherance of its sole or principal object;
iii. such company, society or association is under its constitution not permitted to distribute
any of its profits or gains to any person and is required to utilize its funds solely for
investment or the objects for which it has been established; and
iv. under the constitution of such company, soci ety or association it will upon its winding-up
or liquidation be obliged to give or transfer its assets remaining after the satisfaction of its
liabilities to some other company, society or as sociation with objects similar to those of
the aforesaid company, society or association;
(cC) the receipts and accruals of any association formed and incorporated under section 21 of the
Companies Act, 1973, or deemed by that section to be so formed and incorporated, if–
i. the sole or principal object of the association is to build dwelling houses or other
residential accommodation or to purchase newly built dwelling houses or other newly built
residential accommodation for occupation by persons who are–
(aa) employees of any employer who is a member of the association or of an employer
who is associated with the aforesaid employer; or
(bb) members of the general public,
or to assist such persons to build dwelling houses for occupation by the persons building
such houses or to purchase newly built dwelling houses or other newly built residential
accommodation for occupation by the persons purchasing such houses or
accommodation;
ii. such sole or principal object is actively pursued;
iii. the profits of the associatio n derived from transactions with the said persons are, having
regard to the future needs of the association, kept to a minimum;
iv. the association does not carry on any business other than business which is directly
connected with the said sole or principal object; and
v. in the case of an association to which the provisions of item (bb) of subparagraph (i)
apply, the directors of the as sociation are independent persons who do not derive any
remuneration for their services to the associat ion (or, if such remuneration is in fact
derived by any such director, it does not in any one year exceed an amount which is

reasonable in the circumstances) and at least one of those directors is a person
nominated by a Minister or the member of an Executive Council of a province responsible
for housing matters;
(cD) the receipts and accruals of any amateur sporting association;
(cE) the receipts and accruals of any political party registered under the provisions of section 36
of the Electoral Act, 1979 (Act No. 45 of 1979);
(cF) the receipts and accruals of any company, so ciety or other association of, persons (including
a trust), whether or not registered under any law (other than a co-operative formed and
incorporated or deemed to be formed and inco rporated under the Co-operatives Act, 1981 (Act
No. 91 of 1981)), if–
i. the sole or principal object of such company , society or association is the provision of
residential accommodation under a sale or a lease or otherwise to aged or retired
persons (being persons who have attained the age of at least 60 years or have retired by
reason of ill-health of infirmity) in a build ing, housing complex or village the residential
units in which, apart from re sidential accommodation occupied by essential staff, are or
are to be occupied exclusively by such aged or retired persons or their spouses or minor
children or dependants;
ii. at least one meal per day and nursing se rvices are provided in addition to the
accommodation;
iii. the activities of such company, society or as sociation are wholly or mainly directed to the
furtherance of its sole or principal object;
iv. the profits of the company, society or association derived from transactions with the said
persons are, having regard to the future needs of the company, society or association,
kept to a minimum;
v. the company, society or association does not carry on any business other than business
which is directly connected with the said sole or principal object;
vi. the company. society or association is under its memorandum, articles of association or
constitution not permitted to distribute any of its profits or gains to any person and is
required to utilize its funds solely for invest ment or the objects for which it has been
established;
vii. the remuneration of employees of the company , society or association is not excessive
having regard to services performed by su ch employees and their working conditions;
and
viii. under the memorandum, articles of association or constitution of the company, society or
association it will upon its winding-up or liquidation be oblig ed to give or transfer its
assets remaining after the satisfaction of its liabilities to some other company, society or
association with objects similar to those of the aforesaid company, society or association
and which is also exempt from tax,
(cG) the receipts and accruals of any persons (oth er than a company) who is ordinarily resident in
any country other than the Republic or of an ex ternal company which is managed and controlled
in any such country, which are derived by such person or company from carrying on business as
the owner or charterer of any ship or aircraft, if a similar exemption or equivalent relief is granted
by the said country to any person (other than a company) ordinarily resident in the Republic or to
any domestic company in respect of any tax im posed in that country on income which may be
derived by such person or company from carrying on in such country any business as owner or
charterer of any ship or aircraft;
(cH) the receipts and accruals of any company, so ciety or other association of persons or any
trust, whether or not registered under any law (other than a co-operative formed and incorporated

or deemed to be formed and incorporated under the Co-operatives Act, 1981 (Act No. 91 of
1981)), if–
i. the sole object of such company, society, a ssociation or trust is to receive, hold and apply
moneys contributed to such company, society, association or trust in accordance with
section 11(hA) in order to discharge any of the following or like obligations imposed upon
any person in terms of any law which regulates mining operations, namely–
(aa) the rehabilitation of disturbances of the surface of land and the prevention and
combating of pollution of the air, land, se a or other water where such disturbances and
pollution are due to mining, prospecting, quarrying or similar operations;
(bb) the protection of the surface of land and water sources and the making safe of
undermined ground and of dangerous excavations, tailings, waste dumps and structures,
of whatsoever nature, made in the course of mining, prospecting, quarrying or similar
operations; and
(cc) the demolition or removal of any build ing, structure or other thing erected or
constructed in connection with mining, prospe cting, quarrying or similar operations, the
removal of any debris or other objects and the re storation, as far as is practicable, of the
surface to its natural state;
ii. such company, society or association is under its constitution, or such trust is under the
instrument establishing such trust, not permitted to distribute any of its profits or gains to
any person and is required to utilize its fund s solely for the object for which it has been
established: Provided that such company, society, association or trust shall be permitted
to invest its funds in institutions approved by the Commissioner, until such time as such
funds are required;
iii. in terms of the constitution of such com pany, society or association or the instrument
establishing such trust it will upon its winding-up or liquidation be obliged to give or
transfer its assets remaining after the satisfac tion of its liabilities to some other company,
society, association or trust with a similar object to that of the said company, society,
association or trust; and
iv. the Commissioner has approved such company, society, association or trust on such
conditions as he may deem necessary to ensur e that the activities of such company,
society, association or trust are wholly dire cted to the furtherance of its sole object;
(cI) the receipts and accruals of any company formed and incorporated under section 21 of the
Companies Act, 1973 (Act No. 61 of 1973), or deemed by the said section to be so formed and
incorporated, or other association of persons or any trust. which has been approved by the
Commissioner, if–
i. the sole object of the company, association or trust is–
(aa) to acquire, hold, develop or improve land or any right to land in the Republic with a
view to enabling any community, in the Republic, of which at least 75 per cent of the adult
members are persons who earn less than R1 800 per month, to acquire such land, or
right thereto, so as to occupy that land wholly or mainly for residential purposes;
(bb) in the furtherance of the achievement of t he object referred to in item (aa), to assist
members of communities referred to in the said item by means of the making of grants or
furnishing of material, labour or advice;
(cc) in the furtherance of, or after the achievement of, the object referred to in item (aa),
to carry on such other activities as are dire ctly connected with the activities contemplated
in items (aa) and (bb), including the prov ision of community facilities and the
establishment and carrying on of community programmes aimed at the furtherance of
community life, job creation and the health and welfare of members of the community; or
(dd) in the case of a company which is fo r the purposes of the Companies Act, 1973 (Act

No. 61 of 1973), the holding company or a subsidiary company or a fellow subsidiary
company of any other company having an object referred to in item (aa), to render
financial, administrative, managerial, landholding or other assistance or services to such
other company;
ii. such sole object is actively pursued;
iii. the company, association or trust is or was not knowingly a party to, or does not
knowingly permit, or has not knowingly perm itted, 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;
iv. the company, association or trust does not carry on any business other than business
which is directly connected with the said sole object;
v. at least–
(aa) 25 per cent of the dire ctors of the company, members of the governing body of the
association or the trustees of the trust, as the case may be, are persons who do not
directly or indirectly derive any benefit, ot her than reasonable remuneration for services
rendered, from the company, association or trust, whether by virtue of their being
members of a community contemplated in subparagraph (i) (aa) or otherwise; and
(bb) one of those directors, members or trust is a person nominated by a Minister or the
member of an Executive Council of a province responsible for housing matters, or, in any
case where a former Administrator of a province was, to the exclusion of such a Minister,
charged with the administration of any applicable law relating to housing, by such
Administrator;
vi. in terms of the memorandum, articles of association, constitution or deed of trust of the
company, association or trust it is upon its deregistration, winding-up or liquidation
obliged to give or transfer its assets remain ing after the satisfaction of its liabilities to
some other company, association or trust which is exempt from tax under this paragraph;
and
vii. such company, association or trust is under its memorandum, articles of association,
constitution or deed of trust not permitted to di stribute any of its profits or gains to any
person and is in terms of such memorandum, ar ticles of association, constitution or deed
of trust required to utilize its fund solely for the object for which it has been formed or to
invest such profits or gains–
(aa) with a financial institution as defined in section 1 of the Financial Institutions
(Investment of Funds) Act, 1984(Act No. 39 of 1984);
(bb) in securities listed on a stock exchan ge as defined in section 1 of the Stock
Exchanges Control Act, 1985 (Act No. 1 of 1985);
(cc) in financial instruments as defined in section 1 of the Financial Markets Control Act,
1989 (Act No. 55 of 1989);
(dd) in other commercial paper, issued or secu red by issuers classified from time to time
by the Treasury as defined in the Exchequer Act, 1975 (Act No. 66 of 1975), where the
Commissioner has approved of the category in which the issuer falls pursuant to such
classification and such category is stated in such memorandum, articles of association,
constitution or deed of trust;
(cJ) the receipts and accruals of any company, other association of persons or trust, whether or
not registered in terms of any law, whic h has been approved by the Commissioner, if–
i. the sole or principal object of such company, association or trust is–

(aa) to raise or receive money for any of the purposes contemplated in item (bb), (cc),
(dd), or (ee) by means of–
(A) donations;
(B) any loan entered into with any person wh o is exempt from tax, any government, any
external company or any public company;
(C) commercial paper or debentures issued to a financial institution as defined in section
1 of the Financial Institutions (Investment of Funds) Act, 1984 (Act No. 39 of 1984); or
(D) a deposit made by any person contemplated in item (cc) as a pre-condition for, or for
the purposes of, securing or enabling the grant of any loan to such person;
(bb) to lend or donate money to any company, association or trust contemplated in
paragraph (cC), (cI), or this paragraph;
(cc) to lend money or to provide other financial assistance to persons who are members
of any community referred to in paragraph (c I) (i) (aa) in the furtherance of the object
mentioned in paragraph (cI) (i); or
(dd) to provide funds or guarantees to a bank registered in terms of the Banks Act, 1990
(Act No. 94 of 1990), a mutual building society registered under the Mutual Building
Societies Act, 1965 (Act No. 24 of 1965), an insu rer registered in terms of the Insurance
Act, 1943 (Act No. 27 of 1943), a pension fund organization registered in terms of the
Pension Funds Act, 1956 (Act No. 24 of 1956), or the Development Bank of Southern
Africa, if such funds or guarantees are pr ovided on condition that such bank, mutual
building society, insurer or pension fund organization or the said Development Bank of
Southern Africa shall utilize the funds or guarantees solely to lend money or provide other
financial assistance to persons, and for the achievement of the object, referred to in item
(cc);
(ee) to provide funds or guarantees to an in surer registered or approved in terms of the
Insurance Act, 1943 (Act No. 27 of 1943), carrying on a short-term insurance business,
including an underwriter at Lloyds authorized in terms of the said Act to carry on
insurance business in the Republic, if such funds or guarantees are provided on condition
that–
(A) such insurer shall utilize the funds or guarantees to provide a loan guarantee policy,
as defined in paragraph 1 of the Schedule to the Usury Act, 1968 (Act No. 73 of 1968), to
a money lender as defined in that Act; and
(B) such policy is provided in respect of l oans or other financial assistance provided by
such money lender to persons, and for the achievement of the object, referred to in item
(cc);
ii. such sole or principal object is actively pursued;
iii. the company, association or trust does not carry on any business other than business
which is directly connected with the said sole or principal object;
iv. the company, association or trust is under its memorandum, articles of association,
constitution or deed of trust required to utilize its funds solely for the object for which it
has been established or for investment–
(aa) with the South African Reserve Bank, to t he extent to which it is required to do so in
terms of any law, or with a financial institut ion as defined in section 1 of the Financial
Institutions (Investment of Fund s) Act, 1984 (Act No. 39 of 1984);
(bb) in securities listed on a stock exchan ge as defined in section 1 of the Stock
Exchanges Control Act, 1985 (Act No. 1 of 1985);
(cc) in financial instruments as defined in section 1 of the Financial Markets Control Act,
1989 (Act No. 55 of 1989);
(dd) in other commercial paper, issued or secu red by issuers classified from time to time
by the Treasury as defined in the Exc hequer Act, 1975 (Act No. 66 of 1975), if the

Commissioner has approved of the category in which the issuer falls pursuant to such
classification, and such category is stated in such memorandum, articles of association,
constitution or deed of trust;
v. the company, association or trust is under its memorandum, articles of association,
constitution or deed of trust not permitted to di stribute any of its profits or gains to any
person, unless such person is exempt from tax under this paragraph or paragraph (cC),
(cI) or (f);
vi. in terms of the memorandum, articles of association, constitution or deed of trust of the
company, association or trust it is upon its deregistration, winding-up or liquidation
obliged to give or transfer its assets remain ing after the satisfaction of its liabilities to
some other company, association or trust which is exempt from tax under this paragraph
or paragraph (cC), (cI) or (f);
vii. at least–
(aa) 25 per cent of the dire ctors of the company, members of the governing body of the
association or the trustees of the trust, as the case may be, are persons who do not
directly or indirectly derive any benefit, ot her than reasonable remuneration for services
rendered, from the company, association or trust, whether by virtue of their being
members of a community contemplated in subparagraph (i)(cc) or otherwise; and
(bb) one of those directors, members or truste es is a person nominated by the Minister of
Finance;
(cK) the receipts and accruals of any company, if–
i. the sole object of such company is to supply electricity, whether as principal or as agent,
to the electricity consumers of any province referred to in section 124 of the constitution
or of any local authority as defined in secti on 1 of the Electricity Act, 1987 (Act No. 41 of
1987);
ii. such sole object is actively pursued;
iii. such company is under its memorandum or articles of association not permitted to
distribute any of its profits or gains to an y member and is required to utilize its funds
solely for investment or the object for which it has been formed;
iv. the Commissioner has approved such company subject to such conditions as he may
deem necessary to ensure that the activities of such company are wholly directed to the
furtherance of its sole object;
v. in terms of the memorandum or articles of association of such company it will upon its
deregistration, winding-up or liquidation be obliged to transfer its assets remaining after
the satisfaction of its liabilities to–
(aa) some other company which is exempt from tax in terms of this paragraph; or
(bb) an undertaker or class of undertaker as c ontemplated in section 6 of the Electricity
Act, 1987; and
vi. the members of such company consist of Eskom and–
(aa) the provincial government of such province; and
(bb) a local authority referred to in subparagraph (i);
(cc) a regional services council or a joint services board referred to in paragraph (c) of the
definition of “local authority” in section 1; or
(dd) a trust acting as nominee for such provin ce local authority, regional services council
or joint services board;
(cL) [Deleted by Income Tax Act No 36 of 1996]

(cM) the receipts and accruals of any company formed and incorporated under section 21 of the
Companies Act, 1973 (Act No. 61 of 1973), or deemed by the said section to be so formed and
incorporated, which has been approved by the Commissioner, if–
i. the sole or principal object of the company is to promote and facilitate the distribution of
agricultural and related commodities;
ii. such sole or principal object is actively pursued;
iii. the company 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 le vy which, but for such transa ction, 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;
iv. the company does not carry on any business other than business which is directly
connected with the said sole or principal object;
v. the business directly connected with the sole or principal object was previously carried on
by a municipal council and the control of t he company is exercised by such municipal
council;
vi. in terms of the memorandum or articles of association of the company, it is upon its
deregistration, winding-up or liquidation obliged to give or transfer its assets remaining
after the satisfaction of its liabilities to–
(aa) some other company which is exem pt from tax under this paragraph; or
(bb) a local authority to utilize such asse ts for the same objects as the aforesaid
company:
Provided that–
a. where the Commissioner is satisfied that any such company has during any year of
assessment failed to comply with the provisio ns of this paragraph, he may withdraw his
approval of the company with effect from the commencement of that year of assessment;
b. where the Commissioner has withdrawn his approval of such company, it shall, within two
months from the date of such withdrawal, trans fer, or take reasonable steps to transfer,
its remaining assets to any company which is exempt from tax under this paragraph or to
a local authority to utilize such assets for the same objects as the aforesaid company;
c. where a company fails to transfer, or take reasonable steps to transfer, its remaining
assets as contemplated in paragraph (b) of this proviso, the accumulated net revenue
which has not been distributed shall be deemed for the purposes of this Act to be an
amount of taxable income which accrued to such company during the year of
assessment referred to in parag raph (a) of this proviso; and
d. any decision of the Commissioner in the exercise of his discretion under this paragraph
shall be subject to objection and appeal;
d. the receipts and accruals of any terminati ng building society, pension fund, provident
fund, retirement annuity fund, benefit fund, mut ual savings bank, mutual loan association,
fidelity or indemnity fund, trade union, c hamber of commerce or industries (or an
association of such chambers), local publicity association or non-proprietary stock
exchange;
(dA) the receipts and accruals of any fund managed and controlled in the territory or in any
country the territory of which former ly formed part of the Republic, if–

i. having regard to the rules of the fund and t he manner in which it is administered, such
fund is substantially similar to a pension f und, provident fund or retirement annuity fund;
and
ii. the receipts and accruals of pension funds, provident funds and retirement annuity funds
managed and controlled in the Republic are exempt from any tax on income imposed by
the country concerned;
e. any levy received by or accrued to–
i. any body corporate established in terms of the Sectional Titles Act, 1986 (Act No.
95 of 1986), from its members;
ii. a share block company established in term s of the Share Blocks Control Act, 1980
(Act No. 59 of 1980), from its shareholders; or
iii. any other association of pers ons (other than a company re gistered or deemed to be
registered under the Companies Act, 1973 (Act No. 61 of 1973), and any co-
operative formed and incorporated or deemed to be formed and incorporated
under the Co-operatives Act, 1981 (Act N o. 91 of 1981), and any close coporation
and any trust, but including a company incorporated under section 21 of the
Companies Act, 1973), from its members, where the Commissioner is satisfied
that, subject to such conditions as he may deem necessary, such association of
persons–
aa. has been formed solely for the purposes of managing the collective interests
common to all its members, which include s expenditure applicable to the common
property of such members and the collection of levies for which such members are liable;
and
bb. is not permitted to distribute any of its funds to any person other than a similar
association of persons:
Provided that such body, company or association 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 pur pose 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 become payabl e by any person under this Act or any other
law administered by the Commissioner;
f. the receipts and accruals of all religious, char itable and educational institutions of a public
character, which carry on religious, charitable or educational activities, as the case may
be, in the Republic, whether or not support ed wholly or partly by grants from public
revenue;
(fA) the receipts and accruals of any fund the so le object of which is to provide funds for any
body, such body being a company, society, associ ation of persons or trust contemplated in
paragraph (cF) or any religious, charitable or educational institution contemplated in paragraph
(f), if such fund–
i. has been approved by the Commissioner subj ect to such conditions as he may deem
necessary to ensure that no benefits are allocated by the fund for purposes other than
the provision of funds for such a body;

ii. has submitted to the Commissi oner a copy of the written constitution, will or any other
written instrument under which it has been established and in terms of which it is–
(aa) not permitted to distribute any of its funds to any person other than such a body
(bb) required to utilize its funds solely for the object for which it has been established or
to invest such funds–
(A) with a financial institution as defined in section 1 of the Financial Institutions
(Investment of Funds) Act, 1984 (Act No. 39 of 1984);
(B) in securities listed on a stock exchan ge as defined in section 1 of the Stock
Exchanges Control Act, 1985 (Act No.1 of 1985); or
(C) in such other financial instruments as the Commissioner may approve;
(cc) required to distribute, unless the Commissioner otherwise directs, at least 75 per cent of its
net revenue (being the gross income of such fund le ss the costs of its administration) to any such
body within a period of 12 months from the end of the financial year during which such net
revenue was derived; and
(dd) required on dissolution to trans fer its assets to any such body;
(ee) not permitted, except to t he extent that the Commissioner di rects, to carry on any business;
(ff) required to submit to the Commissioner a copy of any am endment to the constitution, will or
other written instrument under which it was established;
(gg) not permitted to accept any donation which is not irrevocable and unconditional; and
(hh) required to apply its net revenue, unless the Minister of Finance otherwise directs, for the
furtherance of its sole object in the Republic;
Provided that–
a. where such constitution, will or other wr itten instrument does not comply with the
provisions of this subparagraph, it shall be deemed so to comply if–
i. in the case of a fund established under the terms of a will; or
ii. in the case of a fund established prior to 21 June 1993 under a constitution or
other written instrument which cannot be amended to comply with the said
provisions, the trustee of the fund furn ishes the Commissioner with a written
undertaking that the fund will be administered in compliance with the said
provisions; and
b. notwithstanding the provisions of items (bb) and (ee), any asset or business undertaking
acquired by such fund by way of donation, inheritance or bequest, may be retained or
continued, as the case may be, in the form so acquired:
Provided that–
a. where the Commissioner is satisfied that any such fund has during any year of
assessment failed to comply with the provisio ns of this paragraph, he may withdraw his
approval of the fund with effect from the commencement of that year of assessment;
b. where the Commissioner has withdrawn his approval of such fund, it shall, within two
months from the date of such withdrawal, trans fer, or take reasonable steps to transfer,
its remaining assets to any such body which is exempt from tax under paragraph (cF) or
(f);
c. where a fund fails to transfer, or take reas onable steps to transfer, its remaining assets
as contemplated in paragraph (b) of this prov iso, the accumulated net revenue which has
not been distributed shall be deemed for the purposes of this Act to be an amount of
taxable income which accrued to such fund duri ng the year of assessment referred to in
paragraph (a) of this proviso; and

d. any decision of the Commissioner in the exercise of his discretion under this paragraph
shall be subject to objection and appeal;
g. any amount received as a war pension, or as an award or a benefit under any law
relating to the payment of compensation in respect of diseases contracted by persons
employed in mining operations;
(gA) any disability pension paid under section 2 of the Social Assistance Act, 1992 (Act No. 59 of
1992);
(gB) any compensation paid in terms of the Workmen’s Compensation Act, 1941 (Act No. 30 of
1941), or the Compensation for Occupational Injuries and Diseases Act, 1993 (Act No130 of
1993)
h. interest received by or accrued to–
i. any person (other than a company) not ordinarily resident nor carrying on
business in the Republic; or
ii. an external company not carrying on business in the Republic,
from stock or securities (including Treasury Bills) issued by t he Government including the South
African Transport Services, or any local authority within the Republic or the Electricity Supply
Commission or the South African Broadcasting Corpor ation: Provided that, if in the case of any
such stock or securities issued in respect of a loan raised in a country outside the Republic, the
Treasury has, with the approval of the Minister of Finance, given an undertaking that the interest
derived therefrom by any person not ordinarily resi dent in the Republic or by any external
company shall be exempt from taxes in the Republic , the interest received by or accrued to such
a person or company from such of the said stock or securities as were acquired by such person
or company outside the Republic and paid for by such person or company in the currency of any
country other than the Republic shall be exempt from normal tax even if that person or company
carries on business in the Republic: Provided further that the exemption under this paragraph
shall not apply in respect of interest which on or after 1 November 1987 is received by or accrues
to–
a. a person (other than a company) who is ordina rily resident in a neighbouring country, if
such stock or security was acquired by him on or after that date; or
b. a company which is incorporated, register ed, managed or controlled in any neighbouring
country unless the Commissioner is satisfied that such stock or security was acquired by
it before that date and that on both that date and the date of receipt or accrual of such
interest one or more natural persons, not ordinarily resident in the Republic, held for their
own benefit all the issued shares of such company:
Provided further that the exemption under this paragraph shall not apply to any natural person
unless such person was physically absent from t he Republic for a period or periods of at least
183 days in aggregate during the year of assessment in which such interest was received or
accrued;
(hA) interest received by or accrued to a person (other than a company) who is ordinarily resident
outside the Republic or a company which is managed and controlled outside the Republic:
Provided that–
i. the exemption under this section shall not apply to any natural person who was at any
time ordinarily resident in the Republic if su ch person has during the year of assessment
carried on business in the Republic;

ii. for the purposes of this paragraph the ex pression “Republic” shall include any country
which has for the purposes of applying any regulation made under section 9 of the
Currency and Exchanges Act, 1933 (Act No. 9 of 1933), been included in the common
monetary area;
iii. for the purposes of this paragraph, so mu ch of any dividend as has been distributed by
any unit portfolio constituting a company in terms of paragraph (e) of the definition of
“company” in section 1 out of interest deriv ed by such unit portfolio which is exempt from
tax in the hands of such unit portfolio under the provisions of paragraph (iA), shall be
deemed to be interest;
iv. the exemption under this paragraph shall not apply to any natural person unless such
person was physically absent from the Republ ic for a period or periods of at least 183
days in aggregate during the year of assessm ent in which such interest was received or
accrued; and
v. the exemption under this paragraph shall no appl y to any interest received by or accrued
to a company which is managed and controlled outside the Republic, if such interest is
effectively connected with the business carr ied on by that company in the Republic.
i.
(i) [Sub-para. (i) deleted by s. 8 (1) (n) of Act No. 36 of 1966] (ii) [Sub-para. (ii) deleted by s.8 (1) (n) of Act No. 36 of 1966] (iii) so much of the interest on Tax Redemption Certificates held by any one person as
does not exceed the sum of fifty rand;
(iv) [Sub-para. (iv) deleted by s. 10 (1) (d) of Act No. 101 of 1990.] (v) interest on any loan portion of the normal or super tax imposed under the Income Tax
Act, 1953, or any subsequent Act of Parliament;
(vi) [Sub-para. (vi) deleted by s.8 (1) (n) of Act No. 36 of 1966] (vii) to (x) inclusive [Sub-paras. (vii) to (x) in clusive deleted by s. 7 (1) (a) of Act No. 65 of
1973.] (xi) [Sub-para. (xi) deleted by s. 7 (1) (c) of Act No. 104 of 1979.] (xiA) [Sub-para. (xiA deleted by s. 10 (1) (f) of Act No. 101 of 1990.] (xiB) [Sub-para. (xiB) deleted by s. 7(1)(d) of Act No. 104 of 1979.] (xiC) [Sub-para. (xiC) deleted by s. 10(1) (f) of Act No. 101 of 1990.] (xiD) [Sub-para. (xiD) deleted by s. 10 (1) (f) of Act No. 101 of 1990.] (xiDA) [Sub-para. (xiDA) deleted by s. 10 (1) (f) of Act No. 101 of 1990.] (xiDB) and (xiDC) [Sub-paras. (xiDB) and (xiD C) deleted by s. 10 (1) (f) of Act No. 101 of
1990.] (xiE) [Sub-para. (xiE) deleted by s. 10 (1) (f) of Act No. 101 of 1990.]

(xii) [Sub-para. (xii) deleted by s.8 (1) (n) of Act No. 36 of 1966] (xiiA) [Sub-para. (xiiA) deleted by s.8 (1) (n) of Act No. 36 of 1966] (xiii) [Sub-para. (xiii) deleted by s.8 (1) (n) of Act No. 36 of 1966] (xiv) [Sub-para. (xiv) deleted by s.8 (1) (n) of Act No. 36 of 1966] (xv) in the case of any taxpayer who is a nat ural person, so much of the aggregate of any
interest received by or accrued to him which is not otherwise exempt from tax, as does
not during the year of assessm ent exceed the amount of R2 000;
(xvi) in the case of any taxpayer who is a natural person, so much of the aggregate of
any amounts received by or accrued to him by way of dividends referred to in section
11(s) and any amounts received by or accrued to him which have been distributed to him
out of unit portfolios which in terms of subsecti on (5B) of section 19 are for the purposes
of that section deemed to be income derived otherwise than in the form of dividends, as
does not during the year of assessment exce ed the amount of R2 000 less the amount of
any interest which is exempt from tax under subparagraph (xv);
(iA) in the case of any unit portfolio referred to in paragraph (e) of the definition of “company” in
section 1, so much of the interest received by or accrued to such unit portfolio as has been
distributed, or as the Commissi oner is satisfied will be distributed, by way of a dividend or a
portion of a dividend, to persons who have become entitled to such dividend by virtue of their
being registered as holders of units in such unit portfolio on a date falling on or after the first day
of April, 1971;
j. the receipts and accruals of any bank, if the Commissioner is satisfied that such bank is
not resident in the Republic and is entrusted by the Government of a territory outside the
Republic with the custody of the principal fo reign exchange reserves of that territory, and
the Minister of Finance decides to apply the pr ovisions of this paragraph to that bank in
respect of the year of assessment under charge;

k.
i. dividends received by or accrued to or in favour of any person: Provided that this
exemption shall not apply–
(aa) to dividends (other than those dist ributed out of profits of a capital nature
and those received by or accrued to or in favour of any person not ordinarily
resident nor carrying on business in the Re public) distributed by a fixed property
company as defined in section 1 of the Un it Trusts Control Act, 1981 (Act No. 54
of 1981), on shares included in a unit portfolio comprised in any unit trust scheme
in property shares authorized under the said Act; or
(bb) to so much of any dividend as has been distributed by any unit portfolio
constituting a company in terms of paragraph (e) of the definition of “company” in
section 1–
(A) out of interest derived by such unit portfolio which is exempt from tax in the
hands of such unit portfolio under the provisions of paragraph (iA); and
(B) out of amounts received by or accr ued to such unit portfolio by way of
dividends referred to in section 11 (s); or
(cc) to any dividend received by or accrued to or in favour of any person where such dividend constitutes or
forms part of any consideration paid or payable to such person in respect of the disposal of shares (other

than affected shares in respect of which the taxpayer has, in terms of the provisions of section 9B, elected
the amount received or accrued on disposal to be deemed to be of a capital nature), which were held as
trading stock by such person in a company and such shares were acquired by such company in terms of
section 85 of the Companies Act, 1973 (Act No. 61 of 1973).
(iA) dividends received by or accrued to or in favour of any unit portfolio constituting a company in
terms of paragraph (e) of the defin ition of “company” in section 1;

ii. [Sub-paras. (ii) deleted by s. 10(1) (k) of Act No. 101 of 1990.] iii. [Sub-paras. (iii) deleted by s. 10(1) (k) of Act No. 101 of 1990.] iv. [Sub-para. (iv) deleted by s. 13 (1) (h) of Act No. 89 of 1969.] v. [Sub-para. (v) deleted by s. 10 (1) (k) of Act No. 101 of 1990.] vi. [Sub-para. (vi) deleted by s. 13 (1) (i) of Act No. 89 of 1969.] (kA) [Para. (kA) deleted by s. 10 (1) (I) of Act No. 101 of 1990.] l. [Para. (I) deleted by s. 10 (1 ) (m) of Act No. 101 of 1990.] m. any amount received by or accrued to an author of a work in respect of the assignment of
or grant of an interest in a copyright in such work, if such amount is chargeable with
income tax in a country other than the Republ ic: Provided that this exemption shall not
apply to any person who is not the first owne r of a copyright under the Copyright Act,
1978 (Act No. 98 of 1978), or to a company;
(mA) [Para. (mA) deleted by section 10(e) of Act No. 28 of 1997] (mB) any benefit or allowance payable in terms of the Unemployment Insurance Act, 1966 (Act
No. 30 of 1966);
n. [Para. (n) deleted by s. 12 (1) (d) of Act No. 129 of 1991.] (nA) where an employee is as a condition of his employment required while on duty to wear a
special uniform which is clearly distinguishable from ordinary clothing, the value of any such
uniform given to the employee by his employer, or so much of any allowance made by the
employer to the employee in lieu of any such uniform as is reasonable;
(nB) any benefit or advantage accruing to any employee (as defined in paragraph 1 of the
Seventh Schedule) by reason of the fact that hi s employer (as defined in the said paragraph),
has, in consequence of the transfer of the em ployee from one place of employment to another
place of employment or the appointment of the employee as an employee of the employer or the
termination of the employee’s employment, borne the expense–
i. of transporting such employee, members of his household and the personal goods and
possessions of him self and the members of his household from his previous place of
residence to his new place of residence; or
ii. of such costs as the Commissioner may a llow which have been incurred by the employee
in respect of the sale of his previous residence and in settling in permanent residential
accommodation at his new place of residence; or
iii. of hiring residential accommodation in an hotel or elsewhere for the employee or
members of his household during the period ending 183 days after his transfer took effect
or after he took up his appointment, as the case may be, if such residential
accommodation was occupied temporarily pending the obtaining of permanent residential
accommodation;

(nC) [Para. (nC) deleted by s. 12 (1) (e) of Act No. 129 of 1991.] (nD) [Para. (nD) deleted by s. 12 (1) (f) of Act No. 129 of 1991.] (nE) any amount (including any taxable benefit determined under the provisions of the Seventh
Schedule) received by or accrued to an empl oyee, as so defined, under a share incentive
scheme operated for the benefit of employees of the taxpayer’s employer, as so defined, which
was derived–
i. upon the cancellation of a transaction under which the taxpayer purchased shares under
such scheme; or
ii. upon the repurchase from the taxpayer, at a price not exceeding the selling price to him,
of shares purchased by him under such scheme,
if in consequence of such cancellation or repurchase the taxpayer has not received or become
entitled to receive any compensation or considerat ion other than the repayment of any portion of
the purchase price actually paid by him;
(nF) [Para. (nF) deleted by s. 12 (1) (g) of Act No. 129 of 1991.] (nG) the value of any benefit or advantage contemplated in paragraph 2 of the Seventh Schedule
derived by an employee who, afte r having retired from full-time service with the employer by
whom such benefit or advantage was granted, has been re-employed by such employer on a
part-time basis, if–
i. the cash remuneration received by or accrue d to the employee in respect of such part-
time employment was payable at a rate not exceeding R5 000 per annum;
ii. the employee retired from such full-time service on or after attaining the age of 60 years
or as a result of ill-health or other infirmity; and
iii. such benefit or advantage was gran ted before the employee so retired:
Provided that the provisions of this paragrap h shall not apply to any benefit or advantage granted
to an employee who is re-employed on or after 1 March 1992;
(nH) 50 per cent of so much of any taxable benefit derived by the taxpayer during any year of
assessment ending not later than 28 February 1995 in consequence of the granting of any loan in
the circumstances contemplated in paragr aph 2 (f) of the Seventh Schedule as–
i. was determined in relation to any portion of such loan which was before 15 March 1990
utilized by the taxpayer for the purpose of acquiring shares under a share incentive
scheme operated by his employer and which rela tes to so many of such shares as the
taxpayer was or is, under the conditions of such scheme as they applied immediately
before the said date, prohibited from disposing of; and
ii. relates to a period in the year of assessment during which the taxpayer was so prohibited
from disposing of the relevant shares;
o. any remuneration derived by any person as an officer or crew member of a ship
engaged–
i. in the international transportation fo r reward of passengers or goods; or
ii. in the prospecting (including surveys and ot her explanatory work) for, or the mining of,
any minerals (including natural oils) from t he seabed outside the continental shelf of the
Republic as contemplated in section 8 of the Maritime Zones Act, 1994 (Act No. 15 of

1994), where such officer or crew member is employed on board such ship solely for the
purposes of the ‘passage’ of such ship, as defined in the Marine Traffic Act, 1981 (Act
No. 2 of 1981),
if such person was outside the Republic for a period or periods exceeding 183 days in aggregate
during the year of assessment;
p. any amount received by or accrued to any per son who is not ordinarily resident in the
Republic, for services rendered or work or labour done by him outside the Republic for or
on behalf of the Government, including the Railway Administration and any provincial
administration, or any local authority in the Republic or the South African Tourist
Corporation or the Council for Scientific and Industrial Research, if such amount is
chargeable with income tax in the country in which he is ordinarily resident and the
income tax so chargeable is borne by himself and is not paid on his behalf by the
Government, the provincial administration or local authority concerned or the said
Corporation or the said Council;
q. any bona fide scholarship or bursary granted to enabl e or assist any person to study at a
recognized educational or research institution: Provided that if any such scholarship or
bursary has been so granted by an employer or an associated institut ion (as respectively
defined in paragraph 1 of the Seventh Schedul e) to an employee (as defined in the said
paragraph) or to a relative of such empl oyee in circumstances indicating that the
scholarship or bursary concerned would not have been granted had that employee not
been an employee of that employer, the exem ption under this paragraph shall not apply–
i. if any remuneration to which the employ ee was entitled or might in the future
have become entitled was in any manner w hatsoever reduced or forfeited as a
result of the grant of such scholarship or bursary;
ii. in the case of a scholarship or bursary granted to enable or assist any such
relative of an employee so to study, if the remuneration derived by the employee
during the year of assessment exceeded R50 000; and
iii. to so much of any scholarship or bursary contemplated in paragraph (ii) as in the
case of any such relative exceeds R1 600 during the year of assessment;
(qA) [Para (qA) deleted by s. 12 (1) (j) of Act No 129 of 1991 ] r. any gratuity (other than a leave gratuity) rece ived by or accrued to any person from public
funds upon his retirement from any office or employment under the Government,
including the Railway Administration and any pr ovincial administration, or from the funds
of the Land and Agricultural Bank of South Afri ca upon his retirement as a member of the
board of the said Bank, which the Tr easury declares to be free of tax
s. the receipts and accruals derived by any company from the realization of assets
consisting of gold bullion or shares in companies, if such assets were acquired by such
company with funds which were transferred to the Republic from any country outside the
Republic by arrangement with the Treasury or with funds derived from the realization of
similar assets acquired with the proceeds derived from any such assets or from dividends
received in respect of such shares, and the Tr easury has with the approval of the Minister
of Finance given an undertaking that any such receipts and accruals shall be exempt
from the tax, provided particulars of the terms and conditions of any arrangement with
and any undertaking given by the Treasury and the period during which such undertaking
is to endure are published in the Gazette ;
t. the receipts and accruals–
i. of the Council for Scientif ic and Industrial Research;
ii. of the South African Invent ions Development Corporation;
iii. [Sub-para. (iii) deleted by section 29(c) of Act No. 30 of 1998] iv. [Sub-para. (iv) deleted by section 10(g) of Act No. 28 of 1997]

v. of the Armaments Development and Pro duction Corporation of South Africa
Limited, established under section 2 of the Armaments Development and
Production Act, 1968 (Act No. 57 of 1968);
vi. of any company during any period during which all the issued shares of such
company are held by the Corporation re ferred to in subparagraph (v), if the
operations of such company are conducted in pursuance of, or are ancillary or
complementary to, the objects of the said Corporation:
vii. [Sub-para. (vii) deleted by sect ion 10(g) of Act No. 28 of 1997] viii. [Sub-para. (viii) deleted by Revenue Laws Amendment Act No 46 of 1996] ix. [Sub-para. (ix) deleted by Revenue Laws Amendment Act No 46 of 1996] x. of the Development Bank of Southern Africa established on 30 June 1983;
xi. [Sub-para. (xi) deleted by section 18 of Act No. 53 of 1999];
xii. of KESCOR (Proprietary) Limited, a company registered under the Companies
Act, 1973, on 11 May 1990;[Sub-para. (xii) added by s. 12 (1) (k) of Act No. 129
of 1991.)
xiii. [Sub-para. (xiii) deleted by s. 9 (1) (f) of Act No. 21 of 1994.] xiv. [Sub-para. (xiv) deleted by Income Tax Act No 38 of 1996] xv. of a recognized company as contemplated in section 2 of the Provision of Special
Funds for Tertiary Training and Education Act, 1993, which has been approved
by the Commissioner;
(tA) the receipts and accruals of any company which qualifies for exemption under section 2 of
the Company Tax Amendment Decree, 1994 (Decree No . 2 of 1994 of Ciskei), which are derived
from a source within the territory of the former Republic of Ciskei;
u. any amount received by or accrued to any per son from such person’s spouse or former
spouse by way of alimony or allowance or maintenance of such person or any children
under an order of judicial separation or di vorce granted in consequence of proceedings
instituted after the twenty-first day of March, 1962, or under any agreement of separation
entered into after that date;
v. [Para. (v) deleted by section 10(1)(s) of Act No. 141 of 1992.] (vA) [Para. (vA) deleted by section 10(1)(s) of Act No. 141 of 1992.] u. [Para. (w) deleted by section 29(e) of Act No. 30 of 1998] v. so much of any amount (being a lump sum) referred to in paragraph (d) of the definition
of “gross income” in section 1 or in section 7A (4A) or (5) as does not exceed R30 000
less the sum of any other amounts whic h have been excluded from the taxpayer’s
income by virtue of the exempt ion conferred by this paragraph, whether in the current or
any previous year of assessment: Provided t hat the exemption under this paragraph shall
not apply in respect of any amount received by or accrued to any person upon or
because of the termination or because of the impending termination of the services
required to be rendered by him as the holder of any office or employment or in respect of
the relinquishment, termination, loss, repudiation, cancellation or variation of his office or
employment or in respect of his appointment (or right or claim to be appointed) to any
office or employment, unless–
i. such person has attained the age of fifty-five years; or
ii. the termination or impending termination of such person’s services or the
relinquishment, termination, loss, repudia tion, cancellation or variation of his
office or employment or of his appointment (or right or claim to be appointed to
any office or employment is due to superannuation, ill-health or other infirmity; or
iii. [Sub-para. (iii) deleted by s. 10 (1) (f) of Act No. 21 of 1995.] iv. the termination or impending termination of such person’s services is due to his
employer having ceased to carry on or intending to cease carrying on the trade in
respect of which such person was empl oyed or to such person having become

redundant in consequence of his employer having effected a general reduction in
personnel or a reduction in personnel of a particular class and, where such
person’s employer is a company, such pers on was not at any time a director of
such company and did not at any time hold more than five per cent of the issued
share capital or members’ interest in such company;
Provided further that, notwithstanding the provisions of section 37D, any such amount which was
received by or accrued to a married woman and which was in whole or in part excluded from her
husband’s taxable income under the provisions of this paragraph, shall for the purposes of
determining the exemption under this paragraph in respect of any such amount subsequently
received by or accrued to either spouse be deemed to be an amount which was received or
accrued to the husband.
y. [Para (y) Deleted by s. 10 (1) (p) of Act No 101 of 1990 ] z. any amount received by or accrued to or in favour of any person from the State by way of
a subsidy on interest payable by him on any amount owing by him on any loan or
advance utilised by him for the purposes of pastoral, agricultural or other farming
operations carried on by him;
(zA) any amount by way of rebate or other assistance received by or accrued to or in favour of
any exporter (as defined in section 11bis (1)) under any scheme for the promotion or financing of
exports which is for the purposes of this par agraph approved by the Minister of Trade and
Industry with the concurrence of the Minister of Finance: Provided that where the person entitled
to claim such amount from the State has, under an agreement directly connected with the export
trade carried on by him, agreed to pay the whole or any portion of such amount to any other
person, the exemption under this paragraph shall also apply to the whole or such portion of such
amount received by or accrued to such other person under the said agreement;
(zB) any amount received by or accrued to any employer from a fund which has under an
industrial council agreement been established as contemplated in section 48 (1) (d) of the Labour
Relations Act, 1956 (Act No. 28 of 1956) or section 39 (4) of the Manpower Training Act, 1981
(Act No. 56 of 1981), for the training of employees for skilled work, if such employer has
undertaken such training in respect of his employees;
(zC) any amount received by or accrued to or in favour of any person from the State by way of a
subsidy under any scheme designed to encourage the establishment, expansion or carrying on of
industrial or commercial undertakings in an ec onomic development area, if such subsidy was
granted in respect of–
i. wages paid by such person in carrying on any such undertaking; or
ii. the expenses incurred by such person in training employees employed by him in such
undertaking;
(zD) any amount received by or accrued to or in favour of any person by way of a reimbursement
by the State of expenditure incurred by him in relocating in an economic development area any
industrial or commercial undertaking, or part of such an undertaking, carried on by him elsewhere
than in such area, except to the extent that t he said amount relates to any expenditure claimed by
and allowed to such person as a deduction from hi s income under the provisions of this Act or
has been taken into account in the determination u nder this Act of the value of any machinery or
plant for the purposes of determining any allowance in respect of such machinery or plant;
(zE) any amount received by or accrued to the Small Business Development Corporation,
Limited, by way of any subsidy or assistance payable by the State

(zF) any amount (other than interest) received by or accrued to any person from the State in
terms of any export incentive scheme, being a payment in lieu of any allowance or credit to which
such person was or could have become entitled in terms of the provisions of section 11bis (6);
(zG) any amount which on or after 15 May 1989 wa s received by or accrued to a film owner (as
defined in section 24F) by way of a subsidy payabl e by the State under any scheme designed to
promote the production of films (as defined in the said section);
(zH) any amount received by or accrued to or in favour of any person from the State in terms of–
i. the Regional Industrial Development Programme which came into operation on 1 May
1991;
ii. the Simplified Regional Industrial Development Programme, which came into operation
on 1 October 1993 by way of a grant;
iii. the Small/Medium Manufacturing Development Programme, which came into operation
on 1 October 1996 by way of a grant;
iv. the Tax Holiday Scheme contemplated in se ction 37H, which came into operation on 1
October 1996 by way of a grant.
2. Notwithstanding the exemptions provided for in paragraphs (h) and (k) of subsection (1)–
a. all amounts falling within the scope of the said paragraphs shall be set out by the
taxpayer in the return rendered by him; and
b. the said exemptions shall not apply in respect of any portion of an annuity.
3. The exemptions provided by any paragraph of subsection (1) shall not extend to any
payments out of the revenues, receipts, accrua ls or profits mentioned in such paragraph.

4. [Deleted by Income Tax Act No 38 of 1996]

…
Chapter II: The Taxes
Part I: Normal Tax
18A. Deduction of donations to universities, colleges and certain educational funds

1. For the purposes of this section–
“college” means–
a. a technikon established or deemed to have been established or declared to be
such under the Technikon Act, 1993 (Act No 125 of 1993) or any other Act of
parliament, or
b. any other educational institution estab lished by or under any other law of the
Republic if the Commissioner, in consultation with the officer in the public service
of the Republic, upon or to whom powers, duties or functions are or may be
conferred, imposed or assigned in terms of the law in question, is satisfied that

such institution is in all material respects similar to any Technikon referred to in
paragraph (a);
“donation” does not include any voluntary contribution made in respect of school fees;
“educational fund” means–
c. the National Study Loan and Bursary Fund established by section 2 of the
National Study Loans and Bursaries Act, 1964 (Act No. 89 of 1964); or
d. any special fund established in the Republic for the sole purpose of receiving
donations to be used exclusively for educ ational or training purposes in the
Republic, if such fund is administered and controlled by–
i. any education authority which prov ides secondary education beyond the
sixth standard in any school; or
ii. the principal committee or governing body of any school which provides
secondary school education beyond the sixth standard; or
iii. the principal or governing body of any teachers’ training institution; or
iv. the principal or governing body of any permanent institution approved by
the Minister of Finance which has been formed–
(aa) for the promotion of adult education, vocational training or technical
education;or
(bb) to promote the education and training of religious or social workers;
or
(cc) for the education or training of physically or mentally handicapped
persons,
for the benefit of the pupils, students or trainees of the school or institution in question; or
c. any special fund established in the Republic for the sole purpose of receiving
donations to be used exclusively–
i. for educational or training purposes for the benefit of the pupils, students
or trainees of any school or institut ion referred to in paragraph (b) which
is situated in the Republic, where such fund is administered and
controlled by the trustee of any educational trust approved by the
Minister of Finance which has been created under a written deed of trust
with the object of serving such purposes; or
ii. for the benefit of any university or college for purposes other than the
defraying of students’ fees or the gr anting of any bursary to any person
nominated by a donor to such fund; or
iii. for the benefit of any educational inst itution situated outside the Republic
for purposes other than the defraying of students’ fees or the granting of
any bursary to any person nominated by a donor to such fund, if–
(aa) the Minister of Finance is satisfied that such institution provides
educational facilities similar to those provided by a university or college;
and
(bb) the said Minister, having regard to the nature and objects of such
institution and the persons benefiting from the educational facilities
provided by such institution, has approved such institution for the
purposes of this section,

but excluding any such fund established and controlled by any educational institution the
profits of which accrue in whole or in part for the benefit of or are distributable to any
proprietor, partner or share holder of such institution;
d. any trust fund established in the Republic for the sole purpose of receiving
donations from companies to be used exclusively for educational or training
purposes in respect of primary and secondary education in the Republic if–
i. the Minister of Finance has approved such trust fund; and
ii. the sum of the donations in respec t of which prospective donors have
irrevocably committed themselves to donate to such trust fund, is at the
time of the approval of such trust fund not less than R1 000 000;
“educational or training purposes”, in relation to any fund referred to in paragraph (b), (c)
or (d) of the definition of “educational fund” in this subsection, means–
e. the defrayal of any expenditure directly in curred in the provision of educational or
training facilities (including expenditure on board and lodging facilities but
excluding any expenditure in respect of tuition or boarding fees for, or the
granting of any bursary to, any person nominated by a donor to such fund), or
f. the investment of any amount received by such fund in the form of cash
donations, if such amount is not immediately required to be used for the defrayal
of any expenditure as contemplated in pa ragraph (a) of this definition but is,
together with any income derived from su ch investment, so used from time to
time; or
g. the application of any property received by such fund by way of any donation in
kind in order to provide any educational or training facility or, where such donated
property has been realized, the disposal of the proceeds from such realization as
contemplated in paragraph (a) or (b);
“specified educational project
[Definition of “specified educational project” deleted by s. 14 (1) (d) of Act No. 91 of 1982
] “taxable income”, in relation to any taxpay er, means the taxpayer’s taxable income as
calculated before allowing any deductions under this section and, in the case of any
company carrying on mining operations, bef ore allowing any deduction under section
15(a) and before allowing any set-off of any part of the balance of assessed loss under
section 20(1)(a) which arose from any deduction made under the said section 15(a);
“university” means a university established by an Act of Parliament, and a university
college established under the Tertiary Education Act, 1988 (Act No 66 of 1988)
2. Notwithstanding anything to the contrary in this Act, there shall be allowed to be deducted
from the
taxable income of the taxpayer so much of the sum of any bona fide
donations made by the taxpayer during the year of assessment–
a. to any university or college for purposes other than the defrayal of students’ fees
for, or the granting of any bursary to, any person nominated by a donor to such
fund; and
b. to any educational fund;
c. [Deleted by Income Tax Act No 38 of 1996]

3. Any claim for a deduction in respect of any donation under subsection (2) shall not be
allowed unless supported by a receipt issued by the university, college or
person in
control of the educational fund concerned on which the following particulars are given,
namely–
a. the date of the receipt of the donation;
b. the name of the university, college or educational fund which received the
donation, together with an address to which enquiries may be directed in
connection therewith; and
c. the name and address of the donor,
d. the amount of the donation or the nature of the donation (if not made in cash);
e. a certification to the effect that the re ceipt 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 purposes of the uni versity, college or educational fund
concerned;

4. If any deduction is claimed by any taxpayer under the provisions of subsection (2) in
respect of any donation of property in kind, the amount of such deduction shall be
deemed to be an amount equal to
a. where such property constitutes trading stock of the taxpayer (including any
livestock or produce in respect of whic h 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) or, in the case of such livestock or produce, the
said paragraph 11, in relation to the donation of such property;
b. where such property (other than trading stock) constitutes an asset used by the
taxpayer for the purposes of his trade, 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 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, manufa ctured, erected, assembled, installed
or constructed by or on behalf of the taxpay er in order to form the subject of the
said donation, the cost to the taxpayer of such property.

5. Any books of account, records or other documents relating to any fund referred to in
subsection (6) shall
a. where kept in book form, be retained and carefully preserved by any person in
control of such fund for a period of five years from the date of the last entry in any
book; or
b. where not kept in book form, be retained and carefully preserved by any person
in control of such fund for a period of five years after completion of the
transactions, acts or operati ons to which they relate.

6. In the application of the provisions of this section in so far as they relate to any fund
referred to in paragraph (b), (c) or (d) of t he definition of “educational fund” in subsection
(1), the Commissioner may by notice in writing require any person whom the
Commissioner may deem able to furnish information in regard to such fund;
a. to answer any questions relating to such fund; 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 fund;
or

c. to attend at the time and place appointed by the Commissioner for the purposes
of producing for examination by the Co mmissioner or any person appointed by
him, any books of account, records or other documents relating to such fund.

7. If after acting as contemplated in subsection (6), the Commissioner has reasonable
grounds for believing that the administrator of any fund referred to in that subsection has
in any way failed to carry out the objects for which the fund was established or has
expended moneys belonging to the fund for purpo ses not covered by such objects, the
Commissioner may by notice in writing addres sed to that administrator direct that
donations to such fund shall not qualify for deduction under the provisions of subsection
(2) in respect of any year of assessment specified in such notice, and any claim by any
taxpayer for such deduction shall accordingly be disallowed.

Income Tax Amendment – South Africa

21. (1) Section 10 of the Income Tax Act, 1962, is hereby amended—
(a) by the deletion of paragraphs (c B), (cC), (c D), (c F), (c I), (c J), (f) and (f A) of
subsection (1);
(b) by the deletion of paragraph (cK) of subsection (1);
(c) by the insertion after paragraph (cM) of subsection (1) of the following
paragraph:
‘‘(c N) the receipts and accruals of any public benefit organisation which
has been approved by the Commissioner in terms of section 30(3);’’;
(d) by the substitution for paragraph (d) of subsection (1) of the following
paragraph:
‘‘(d) the receipts and accruals of any [terminating building society]—
(i) pension fund, provident fund, retirement annuity fund; or
(ii) benefit fund [mutual savings bank] , mutual loan association, fidelity
or indemnity fund, trade union, chamber of commerce or industries (or an
association of such chambers), local publicity association or non-
proprietary stock exchange approved by the Commissioner subject to
such conditions as the Minister may prescribe by regulation; or
(iii) company, society or other association of persons established to—
(aa) provide social and recreational amenities or facilities for the
members of such company, society or other association; or
(bb) promote the common interests of persons (being members of
such company, society or association of persons) carrying on any
particular kind of business, profession or occupation, approved by
the Commissioner subject to such conditions as the Minister may
prescribe by regulation;’’;
(e) by the substitution for subparagraph (iii) of paragraph (hA) of subsection (1) of
the following subparagraph:
‘‘(iii) for the purposes of this paragraph, so much of any dividend as has
been distributed by any unit portfolio constituting a company in terms of
paragraph (e)(i) of the definition of ‘company’ in section 1 out of interest
derived by such unit portfolio which is exempt from tax in the hands of
such unit portfolio under the provisions of paragraph (iA), shall be
deemed to be interest;’’;
(f) by the substitution for subparagraph (xv) of paragraph (i) of subsection (1) of
the following subparagraph:

‘‘(xv) in the case of any taxpayer who is a natural person, so much of the
aggregate of any dividends and interest received by or accrued to him
which [is] are not otherwise exempt from tax, as does not during the year
of assessment exceed [the amount of R2 000] —
(2) (a) Subsection (1)(a) , (c) and (d) shall come into operation on a date fixed by the
President by proclamation in the Gazette: Provided that any company, society, trust,
institution, union, chamber, exchange, other association of persons or fund whose
receipts and accruals were exempt from tax in terms of the provisions of paragraphs
(cB), (c C), (c D), (c F), (c I), (c J), (f) and (fA) of section 10(1) of the Income Tax, 1962,
prior to the amendment thereof by this section, which company, society, trust,
institution, union, chamber, exchange, other association of persons or fund applies for
approval by the Commissioner in terms of section 10(1) (d)(ii) or (iii) or section 30 of that
Act within a period of 12 months after the date so fixed by the President, or submit a
written undertaking as provided for in the said section 30 within such period, shall
continue to enjoy exemption until written notific ation by the Commissioner of his decision
in terms of the said section 10(1) (d)(ii) or (iii) or section 30: Provided further that any
such company, society, trust, institution, union, chamber, exchange, other association or
fund, shall subject to the provisions of the said section 30—
(i) within a period of five years after the date so fixed by the President; or
(ii) at such time as any amendment to the constitution or other written document
in terms of which it has been established is effected, whichever is sooner, submit
to the Commissioner a copy of such constitution or other
written instrument in terms of which it has been established.

Substitution of section 18A of Act 58 of 1962, as inserted by section 15 of Act 52
of 1970 and substituted by section 16 of Act 96 of 1981 and amended by section
14 of Act 91 of 1982, section 16 of Act 94 of 1983, section 16 of Act 12
1 of 1984,
section 15 of Act 90 of 1988, section 17 of Act 101 of 1990, section 20 of Act 129 of
1991 and section 11 of Act 36 of 1996

24. (1) The following section is hereby substituted for Section 18A of the Income Tax
Act, 1962:
‘‘ Deduction of donations to certain public benefit organisations
18A. (1) There shall be allowed to be deducted from the taxable income
of any taxpayer so much of the sum of any bona fide donations in cash or in
kind made by such taxpayer and actually paid or transferred during the year
of assessment to—
(a) any—
(i) public benefit organisation approved by the Commissioner under
section 30; or
(ii) institution, board or body contemplated in section 10(1) (cA)(i),
which carries on in the Republic any public benefit activity which is
determined by the Minister by notice in the Gazette for the purposes of
this section, a copy of which shall be laid upon the table in Parliament;
(b) any public benefit organisation ap proved by the Commissioner under
section 30, which—
(i) provides funds solely to any public benefit organisation, institution,
board or body contemplated in paragraph (a); and
(ii) during the year of assessment preceding the year of assessment of
such public benefit organisation during which the donation is
received, distributed or incurred the obligation to so distribute at

least 75 per cent of the funds received by or accrued to such
organisation by way of donations which qualified for a deduction
in terms of this section, as does not exceed the greater of—
(aa) five per cent of the taxable income of the taxpayer as
calculated before allowing any deduction under this section or
section 18; or
(bb) R1 000.
(2) Any claim for a deduction in respect of any donation under subsection
(1) shall not be allowed unless supported by a receipt issued by the public
benefit organisation, institution, board or body concerned, on which the
following details are given, namely—
(a) the reference number of the public benefit organisation, institution,
board or body issued by the Commissioner for the purposes of this
section;
(b) the date of the receipt of the donation;
(c) the name of the public benefit organisation, institution, board or body
which received the donation, together with an address to which enquiries may be
directed in connection therewith;
(d) the name and address of the donor;
(e) the amount of the donation or the nature of the donation (if not made in cash);
(f) 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 or body concerned.
(3) If any deduction is claimed by any taxpayer under the provisions of subsection (1) in
respect of any donation of property in kind, the amount of such deduction shall be
deemed to be an amount equal to—
(a) where such property constitutes 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) 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 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 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)(b B)(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 cost to the taxpayer of such property.
(4) The provisions of subsections (9) and (10) of section 30 shall apply
mutatis mutandis in respect of any institution, board or body contemplated
in subsection (1)(a).
(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 or body has with intent—

(a) in any material way failed to ensure that the objects for which the public
benefit organisation, institution, board or body was established are carried out or
has expended moneys belonging to the public benefit organisation, institution,
board or body for the purposes not covered by such objects; or
(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 such
organisation, institution, board or body by such taxpayer, the Commissioner may
by notice in writing addressed to that person direct that donations to such fund
shall not qualify for deduction under the provisions of this section in respect of
any year of assessment specified in such notice, and any claim by any taxpayer
for such deduction shall accordingly be disallowed.’’.
(2) Subsection (1) shall in so far as it—
(a) determines the limit of the deduction as contemplated in section 18A(1), be
deemed to have come into operation on 1 March 2000, and shall apply in
respect of years of assessment commencing on or after that date; and
(b) amends the rest of section 18A, come into operation on a date fixed by the
President by proclamation in the Gazette.
(3) The public benefit activities determined by the Minister of Finance by notice in the
Gazette as contemplated in section 18A(1)(a) of the Income Tax Act, 1962, shall be
incorporated into that Act within a period of 12 months after the date fixed by the
President in terms of subsection (2)(b).

Insertion of section 30 in Act 58 of 1962

35. (1) The following section is hereby inserted after section 29A of the Income Tax
act, 1962:
‘‘ Public benefit organisations

30. (1) For the purposes of this Act, ‘public benefit activity’ means—
(a) any activity determined by the Minister in terms of subsection (2); and
(b) the providing of funds to—
(i) any public benefit organisation which has been approved in terms
of this section;
(ii) any institution, board or body contemplated in section 10(1) (cA)(i), of
which at least 75 per cent of its resources are applied in the furtherance
of a public benefit activity contemplated in paragraph (a);or
(iii) any association of persons carrying on one or more such public
benefit activity in the Republic:
‘public benefit organisation’ means any organisation of a public
character—
(a) which is a company formed and incorporated under section 21 of the
Companies Act, 1973 (Act No. 61 of 1973), or a trust or an association of
persons; and
(b) of which the sole object is—
(i) subject to the provisions of subsection (3) (b)(iv), to carry on one or
more public benefit activities in a non-profit manner;
(ii) to carry out all such activities (or substantially the whole thereof)
in the Republic, unless the Minister, having regard to the circumstances
of the case, directs otherwise.

(2) (a) The Minister shall, by notice in the Gazette, determine any activity which is of
a philanthropic and benevolent nature, having regard to the needs, interests and well-
being of the general public for the purposes of this section.
(b) A copy of the notice contemplated in paragraph (a) shall be laid upon the
Table in Parliament as soon as practicable.
(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 persons, who are not connected
persons in relation to each other, to accept the fiduciary responsibility of
such organisation;
(ii) prohibited from 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, or to invest such funds—
(aa) with a financial institution as defined in section 1 of the
Financial Institutions (Investment of Funds) Act, 1984 (Act No. 39
of 1984);
(bb) in securities listed on a stock exchange as defined in section
1 of the Stock Exchanges Control Act, 1985 (Act No. 1 of 1985);
or
(cc) in such other prudent investments in financial instruments
and assets as the Commissioner may determine after consultation
with the Executive Officer of the Financial Services Board and the
Director of Non-Profit Organisations:
Provided that the provisions of this subparagraph shall not
prohibit any such organisation fr om retaining any investment
(other than any investment in the form of a business undertaking
or trading activity or asset which is used in such business
undertaking or trading activity) in the form that it was acquired by
way of donation, bequest or inheritance;
(iii) required on dissolution to transfer its assets to any similar public
benefit organisation which has been approved in terms of this section;
(iv) prohibited from carrying on any business undertaking or trading
activity, otherwise than to the extent that—
(aa) the gross income derived from such business undertaking or
trading activity does not exceed the greater of—
(A) 15 per cent of the gross receipts of such public benefit
organisation; or
(B) R25 000;
(bb) the undertaking or activity is—
(A) integral and directly related to the sole object of such
public benefit organisation; and
(B) carried out or conducted on a basis substantially the
whole of which is directed towards the recovery of cost and
which would not result in unfair competition in

relation to taxable entities;
(cc) the undertaking or activity, if not integral and directly related
to the sole object of such public benefit organisation as
contemplated in item (bb) , is of an occasional nature and
undertaken substantially with assistance on a voluntary basis
without compensation; or
(dd) the undertaking or activity is approved by the Minister by
notice in the Gazette, having regard to—
(A) the scope and benevolent nature of the undertaking or
activity;
(B) the direct connection and interrelationship of the under-
taking or activity with the sole purpose of the public benefit
organsiation;
(C) the profitability of the undertaking or activity; and
(D) the level of economic distortion that may be caused by
the tax exempt status of the public benefit organisation
carrying out the undertaking or activity;
(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 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 paid any remuneration 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;
(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 (b)(iii) of the definition of ‘public benefit activity’, has taken reasonable
steps to ensure that the funds are utilised for the purpose for which it has been
provided; and
(g) has, within such period as the Commissioner may determine, been registered
in terms of section 13(5) of the Non-profit Organisations Act, 1997 (Act No. 71 of
1997), and complied with any other requirements imposed in terms of that Act:
Provided that notwithstanding subparagraph (iv) of paragraph (b), any
business undertaking or trading activity, or asset used in such
undertaking or activity, acquired by such organisation before 1 January

2001 by way of donation, bequest or inheritance may be retained or
continued, as the case may be, in the form so acquired for a period of five
years after that date.
(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—
(a) in the case of a public benefit organisation established under the terms of a
will, or under a constitution or other written instrument which cannot be amended
to comply with the said subsection; or
(b) in any other case, for a period not exceeding five years, if the person
responsible in a fiduciary capacity for the funds and assets of such organisation
furnishes the Commissioner with a written undertaking that such organisation will
be administered in compliance with the provisions of this section.
(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, he may after due notice withdraw his approval of the organisation with
effect from the commencement of that year of assessment.
(6) Where the Commissioner has so withdrawn his approval of such organisation, such
organisation shall, within three 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 other organisation which is—
(a) approved in terms of this section; and
(b) not a connected person in relation to such organisation.
(7) Where any such organisation fails so to transfer, or so to take reasonable steps to
transfer, its remaining assets, the accumulated net revenue which has not been
distributed in terms of this section shall for the purposes of this Act be deemed to be an
amount of taxable income which accrued to such organisation during the year of
assessment referred to in subsection (5).
(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) Any books of account, records or other documents relating to any approved public
benefit organisation shall—
(a) where kept in book form, be retained and carefully preserved by any
person in control of such organisation for a period of four years after the date of
the last entry in any book; or
(b) where not kept in book form, be retained and carefully preserved by any
person in control of such organisation for a period of four years after completion
of the transactions, acts or operations to which they relate.
(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 decision of the Commissioner in the exercise of his discretion
under this section shall be subject to objection and appeal.
(12) Any person who is in a fiduciary capac ity responsible for the management or control
of the income and assets of any approved public benefit organisation 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 on conviction be liable to a
fine or to imprisonment for a period not exceeding two years.’’.
(2) Subsection (1) shall come into operation on a date fixed by the President by
proclamation in the Gazette.
(3) The public benefit activities determined by the Minister by notice in the Gazette
as contemplated in section 30(2) of the Income Tax Act, 1962, shall be incorporated into
that Act within a period of 12 months after the date determined by the President in terms
of subsection (2).

Amendment of section 56 of Act 58 of 1962, as amended by section 18 of Act 90 of
1964, section 25 of Act 55 of 1966, section 33 of Act 89 of 1969, sectio
n 38 of Act
85 of 1974, section 21 of Act 113 of 1977, section 13 of Act 101 of 1978
, section 23
of Act 96 of 1981, section 31 of Act 94 of 1983, section 4 of Act 30 of 1984, section
28 of Act 121 of 1984, section 18 of Act 96 of 1985, section 21 of Act 85 of 1987,
section 26 of Act 90 of 1988, section 28 of Act 141 of 1992, section 32 of Act 113 of
1993, section 18 of Act 36 of 1996 and section 39 of Act 30 of 1998 38.

(1) Section 56 of the Income Tax Act, 1962, is hereby amended—
(a) by the substitution for paragraph (h) of subsection (1) of the following
paragraph:
‘‘ (h) by or to any person (including any government) referred to in section
10(1)(a), (b), (c A), [(cB), (c C), (c D)](c E), [(c F), (c I), (c J), (c L)](c N), (d) or (e) [or
(fA )];’’; and
(b) by the deletion of paragraphs (i) and (j) of subsection (1).
(2) Subsection (1) shall come into operation on a date fixed by the President by
proclamation in the Gazette, and shall apply in respect of any donation made on or after
that date.