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Annexure D Section 30 of the Income Tax Act, 1962

Tax Exemption Guide for Public Benefit Organisations in South Africa (Issue 4) 57
Annexure D – Section 30 of the Income Tax Act, 1962
30. Public benefit organisations. —(1) For the purposes of this Act —
“public benefit activity” means —
(a ) any activity listed in Part I of the Ninth Schedul e; and
(b ) any other activity determined by the Minister from time to time by notice in the Gazette
to be of a benevolent nature, having regard to the needs, interests and well -being of
the general public;
“public benefit organisation” means any organisat ion—
(a ) which is —
(i) a non- profit company as defined in section 1 of the Companies Act or a trust or an
association of persons that has been incorporated, formed or established in the
Republic; or
(ii) any branch within the Republic of any company, as sociation or trust incorporated,
formed or established in any country other than the Republic that is exempt from
tax on income in that other country;
(b ) of which the sole or principal object is carrying on one or more public benefit activities,
where—
(i) all such activities are carried on in a non- profit manner and with an altruistic or
philanthropic intent;
(ii) no such activity is intended to directly or indirectly promote the economic self –
interest of any fiduciary or employee of the organisation, otherwise than by way of
reasonable remuneration payable to that fiduciary or employee; and
(iii) . . . . . .
(c ) where—
(i) each such activity carried on by that organisation is for the benefit of, or is widely
accessible to, the general public at large, including any sector thereof (other than
small and exclusive groups);
(ii) . . . . . .
(iii) . . . . . .
(2) Any activity determined by the Minister in terms of paragraph (b ) of the definition of “public
benefit activity” in subsection (1) or any conditions prescribed by the Minister in terms of
subsection (3)(a ) must be tabled in Parliament within a period of 12 months after the date of
publication by the Minister of that activity or those conditions in the Gazett e, for incorporation into this
Act.
(3) The Commissioner shall, for the purposes of this Act, approve a public benefit organisation
which —
(a ) complies with such conditions as the Minister may prescribe by way of regulation to
ensure that the activities and resources of such organisation ar e 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 and no
single person directly or indirectly controls the decision making powers relating to
that organisation: Provided that the provisions of this subparagraph shall not
apply in respect of any trust established in terms of a will of any person;
(ii) prohibited from directly or indirectly distributing any of its funds to any person
(otherwise than in the course of undertaking any public benefit activity) and is
required to utilise its funds solely for the object for which it has been established;

Tax Exemption Guide for Public Benefit Organisations in South Africa (Issue 4) 58
(iii) in the case of a public benefit organisation contemplated in paragraph (a )(i) of the
definition of “public benefit organisation” in subsecti on (1), required on dissolution
to transfer its assets to —
(aa) any public benefit organisation which has been approved in terms of this
section;
(bb) any institution, board or body which is exempt from tax under the
provisions of section 10(1)( cA)(i), w hich has as its sole or principal object
the carrying on of any public benefit activity; or
(cc) the government of the Republic in the national, provincial or local sphere,
contemplated in section 10(1)(a),
which is required to use those assets solely f or purposes of carrying on one or
more public benefit activities;
(iiiA) in the case of a branch of a public benefit organisation contemplated in
paragraph (a )(ii) of the definition of “public benefit organisation” in subsection (1),
is required on termination of its activities in the Republic to transfer the assets of
such branch to any public benefit organisation, institution, board, body,
department or administration contemplated in subparagraph (iii), if more than 15
per cent of the receipts and accruals attributable to that branch during the period
of three years preceding that termination are derived from a source within the
Republic;
(iv) . . . . . .
(v) prohibited from accepting any donation which is revocable at the instance of the
donor for reas ons other than a material failure to conform to the designated
purposes and conditions of such donation, including any misrepresentation with
regard to the tax deductibility thereof in terms of section 18A: Provided that a
donor (other than a donor which i s an approved public benefit organisation or an
institution board or body which is exempt from tax in terms of section 10(1)(cA)(i),
which has as its sole or principal object the carrying on of any public benefit
activity) may not impose conditions which c ould 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 w hich the sole or main purpose is or was the reduction,
postponement or avoidance of liability for any tax, duty or levy which, but for such
transaction, operation or scheme, would have been or would have become payable by
any person under this Act or any other Act administered by the Commissioner;
(d ) has not and will not pay any remuneration, as defined in the Fourth Schedule, to any
employee, office bearer, member or other person which is excessive, having regard to
what is generally considered reasonabl e in the sector and in relation to the service
rendered and has not and will not economically benefit any person in a manner which
is not consistent with its objects;
(e ) complies with such reporting requirements as may be determined by the
Commissioner;
(f) the Commissioner is satisfied that, in the case of any public benefit organisation which
provides funds to any association of persons contemplated in paragraph 10(iii) of
Part 1 of the Ninth Schedule, has taken reasonable steps to ensure that the fund s are
utilised for the purpose for which it has been provided; and
(g ) . . . . . .
(h ) has not and will not use its resources directly or indirectly to support, advance or
oppose any political party.

Tax Exemption Guide for Public Benefit Organisations in South Africa (Issue 4) 59
(3A) The Commissioner may, for the purposes of subsec tion (3), grant approval in respect of
any group of organisations sharing a common purpose, which carry on any public benefit activity
under the direction or supervision of a regulating or co- ordinating body, where that body takes such
steps, as prescribed by the Commissioner, to exercise control over those organisations in order to
ensure that they comply with the provisions of this section.
(3B) W here an organisation applies for approval, the Commissioner may approve that
organisation for the purposes of this section with retrospective effect, to the extent that the
Commissioner is satisfied that that organisation during the period prior to its application complied with
the requirements of a “public benefit organisation” as defined in subsection (1).
(3C) Notwithstanding any other provision of this section, the Director of Nonprofit
Organisations designated in terms of section 8 of the Nonprofit Organisations Act, 1997 (Act No. 71 of
1997), may, in respect of any organisation that has been convicted of an offence under that Act,
request the Commissioner to withdraw the approval of that organisation in terms of subsection (5) and
the Commissioner may pursuant to that request withdraw such approval.
(4) Where the constitution, will or other written instrument does not comply with the provisions
of subsection (3)(b), it shall be deemed to so comply
(a ) . . . . . .
(b ) . . . . . .
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 wri tten instrument
under which it is established to the extent that it relates to the provisions of this section, the
Commissioner shall after due notice withdraw approval of the organisation with effect from the
commencement of that year of assessment, where corrective steps are not taken by that organisation
within a period stated by the Commissioner in that notice.
(5A) W here any regulating or co- ordinating body contemplated in subsection (3A)—
(a ) with intent or negligently fails to take any steps contem plated in that subsection to
exercise control over any public benefit organisation; or
(b ) fails to notify the Commissioner where it become aware of any material failure by any
public benefit organisation over which it exercises control to comply with any provision
of this section,
the Commissioner shall after due notice withdraw the approval of the group of public benefit
organisations with effect from the commencement of that year of assessment, where corrective steps
are not taken by that regulating or co-ordinating body within a period stated by the Commissioner in
that notice.
(6) Where the Commissioner has so withdrawn his approval of such organisation, such
organisation shall, within six months or such longer period as the Commissioner may allow aft er the
date of such withdrawal, transfer, or take reasonable steps to transfer, its remaining assets to any
public benefit organisation, institution, board or body or the government as contemplated in
subsection (3)(b )(iii).
(6A) As part of —
(a ) the diss olution of an organisation contemplated in paragraph (a )(i) of the definition of
“public benefit organization” in subsection (1); or
(b ) the termination of the activities of a branch contemplated in paragraph (a )(ii) of that
definition, if more than 15 per cent of the receipts and accruals attributable to that
branch during the period of three years preceding that termination are derived from a
source within the Republic,
the organisation or branch must transfer its assets to any public benefit organisation, institution, board
or body or the government contemplated in subsection (3)(b )(iii).

Tax Exemption Guide for Public Benefit Organisations in South Africa (Issue 4) 60
(7) If the organisation fails to transfer, or to take reasonable steps to transfer, its assets, as
contemplated in subsection (6) or (6A), an amount equal to the market value of those assets which
have not been transferred, less an amount equal to the bona fide liabilities of the organisation, must
for purposes of this Act be deemed to be an amount of taxable income which accrued to such
organisation during the year of assessment in which approval was withdrawn or the dissolution of the
organisation or termination of activities took place.
(8) The provisions of this section shall not, if the Commissioner is satisfied that the non-
compliance giving rise to the withdrawal contemplated in subsection (5) has been rectified, preclude
any such organisation from applying for approval in terms of this section in the year of assessment
following the year of assessment during which the approval was so withdrawn by the Commissioner .
(9) 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, act 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 answ er any questions relating to such organisation; or
(b ) to make available for inspection by the Commissioner or any person appointed by him,
any books of account, records or other documents relating to such organisation; or
(c ) to attend at the time and place appointed by the Commissioner for the purposes of
producing for examination by the Commissioner or any person appointed by him, any
books of account, records or other documents relating to such organisation.
(11) Any person who is in a fiduciary capacity responsible for the management or control of
the income and assets of any approved public benefit organisation and who intentionally fails to
comply with any provision of this section or of the constitution, will or other written instrument under
whic h such organisation is established to the extent that it relates to the provisions of this section,
shall be guilty of an offence and liable on conviction to a fine or to imprisonment for a period not
exceeding 24 months.
(12) . . . . . .

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