PBO's & Clubs
17 February 2012
Posted by: SAIT Technical
PBOs & Clubs
by Michael Stein
Section 10(1)(cN) of the Income Tax Act exempts from normal tax the receipts and accruals of approved public benefit organisations, to the extent that their receipts and accruals are derived from certain sources. It limits the amount of non-qualifying receipts and accruals that may be derived by the PBO to the greater of
- 5% of its total receipts and accruals during the relevant year of assessment; and
- R150 000.
An amendment effected by the Taxation Laws Amendment Act 2011 increases the second amount from R150 000 to R200 000 with effect as from 1 March 2011.This means that a PBO may, for example, have an annual fund-raising fête with a turnover of up to this amount without jeopardising its tax exemption.
Section 10(1)(c), in turn, limits the amount of non-qualifying receipts and accruals that may be derived by approved recreational clubs to the greater of
- 5% of the total membership fees and subscriptions due and payable by its members during the relevant year of assessment; and
- R100 000.
Here, the amount has been increased from R100 000 to R120 000, again with effect as from 1 March 2011. So, for example, the recreational club’s bar may produce a turnover of up to this amount without losing its tax exemption.