What is the difference between a PBO and NPO?

What is the difference between a PBO and NPO?

The difference between NPO and PBO is that the latter stands for a public benefit organization, and it can be a trust, company, an NPC registered under the new Companies Act, or any other association that has been registered with SARS.

How do I become a public benefit organisation in South Africa?

To register as a PBO, organisations need to submit the following documents to the Tax Exemption Unit of SARS.

1. A certified copy of the organisation’s founding document.
2. A completed application form to register a PBO (Form EI 1)

Can a company be a PBO?

Section 30(1) of the Act defines a PBO as either a company formed and incorporated under section 21 of the Companies Act No. 61 of 1973, or a trust or an association of persons.

What are public benefit activities?

A “public benefit activity” is defined as any activity determined by the Minister by notice in the Gazette, which is of a “philanthropic or benevolent nature, having regard to the needs, interests and well-being of the general public.”

What are Section 21 companies?

Section 21 of the Companies Act 61 of 1973 allows for a ‘not-for-profit company’ or ‘association incorporated not for gain’. Section 21 companies resemble business oriented (for profit) companies in their legal structure, but do not have a share capital and cannot distribute shares or pay dividends to their members.

How many members should an NPO have?

A Non Profit organization is registered by The Department of Social Development. There has to be no less than 5 members in order for the Non Profit Organization to be registered. If there are any less than this The Department of Social Development will reject the application.

Does NGO pay tax in South Africa?

Non profit organisations should register as a Public Benefit Organisation and specifically apply for tax exemption in terms of section 10(1)(cA)(i) of the Income Tax Act. This means that you do not have to pay income tax on donations received.

Does an NPO have to register with SARS?

If you are already registered as a Non-Profit Company (NPC) with the Companies and Intellectual Property Commission (CIPC), then you will automatically be registered with SARS for Income Tax purposes.

What is a public benefit Organisation?

A PBO is any organisation which is: a non-profit company (NPC) as defined in section 1 of the Companies Act or a trust or an association of person that has been incorporated, formed or established in the Republic; or.

Is a church a PBO?

“Looking at the churches themselves, SARS may start by confirming that these religious institutions are in fact registered as Public Benefit Organisations (PBOs) with the Tax Exemption Unit (a unit within SARS)”, says Troost.

What is public benefit South Africa?

The Income Tax Act defines public benefit as “an activity of a benevolent nature, having regard to the needs, interests, and well-being of the general public”.

Is a school a public benefit organisation?

Abuse of donations in terms of Section 18A could result in the withdrawal of the registration of Western Cape Education Department (WCED) schools as Public Benefit Organisations and will consequently deprive schools of the opportunity to raise additional funds for educational purposes.

What makes a PBO a public benefit organisation?

Public Benefit Organisations (PBO’s) as described in Section 30 of the Income Tax Act No. 58 of 1962 (“the Act”), are organisations which by their very nature conduct activities with altruistic and philanthropic intent, in a non-profit manner.

How does a non-profit organisation in South Africa work?

Most non-profit organisations depend on donations from the public. The South African Government has recognised this and to encourage the generosity of the public, has provided a tax deduction for certain donations made by taxpayers. How does this work?

How to become a PBO in South Africa?

If you want your company to be approved as a public benefit organisation (PBO) you must apply at the South African Revenue Service (SARS). To qualify for approval as a PBO an organisation must be incorporated or established in South Africa as: a non-profit company which has a memorandum of incorporation as a founding document

How is an organisation exempt from tax in South Africa?

The organisation will be exempt from income tax if it is approved by the South African Revenue Service (SARS) and complies with the requirements set out on the Income Tax Act. .