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Taxability of grants received from the Department of Arts and Culture

Thursday, 06 November 2014   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: Section 12P(2) lists government grants which are exempt from normal tax if (1) they are listed in the 11th Schedule or (2) they are identified by the Minister of finance in the Government Gazette. We would like to know if the government gazette referred to has been issued. In addition, can you provide guidance as to whether a grant received from the Department of Arts and Culture is exempt from tax or not? The Dept. of Arts and Culture is not listed in the 11th Schedule (but may be included in the government gazette if issued). If the grant is taxable, would it make any difference if it was received by a public benefit organisation i.e. would an otherwise taxable grant be regarded as exempt income on the basis that the recipient thereof is a registered public benefit organisation?

A: We are not aware of any government grant identified by the Minister by notice in the Government Gazette since the introduction of section 12P.  The previous ones were issued in terms of section 10(1)(yA).  

As the Department of Arts and Culture is not listed in the Eleventh Schedule a grant by it will not be exempt from normal tax.  We can’t comment on whether or not the Minister of Finance will exercise the power to exempt grants by way of notice.  The purpose of this Ministerial authority is to provide exemption for certain grants devised between the annual budget periods.  

A grant received by a public benefit organisation will generally be otherwise than from any business undertaking or trading activity and the section 10(1)(cN) exemption should apply.  That would be on the basis that the recipient is an approved public benefit organisation.

Disclaimer: Nothing in this query and answer should be construed as constituting tax advice or a tax opinion. An expert should be consulted for advice based on the facts and circumstances of each transaction/case. Even though great care has been taken to ensure the accuracy of the answer, SAIT do not accept any responsibility for consequences of decisions taken based on this query and answer. It remains your own responsibility to consult the relevant primary resources when taking a decision.



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