Benefits of being a Public Benefit Organization

PBO Tax Workshop Hoosen Agjee 26 th January 2010 www.TaxBenefits4ngos.co.za Business solutions for commerce & NGOs

South African individuals GIFT R 930 million a month to Charity Prof. Adam Habib CCS (Sept 2006) R 12 billion a year !!

Breaking free to financial freedom NPO A turning point in your organisation

Private /Family/Group Endowment ,[object Object],Religious & societal needs. Mainly Education & Bursaries. Provide funds to other NPOs.

Family Charity Trust Trust NGO

PRIVATE FOUNDATION > 1994 ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],Separate Ownership Legal Entity

Section 21 Co. ,[object Object],[object Object],[object Object],[object Object],[object Object]

Trust ,[object Object],[object Object],[object Object],[object Object],[object Object]

Association of Persons ,[object Object],[object Object],[object Object],[object Object],[object Object]

The Choice Tax Benefits are the SAME for all

Becomes a Formal Body ,[object Object],[object Object],[object Object]

Can open bank acc & Start operating ,[object Object]

Voluntary registration into NPO Sector ,[object Object],354-123 NPO ,[object Object],[object Object],[object Object],[object Object],NPO

Why an NPO ??? Broaden Donor Base ! U Save Money ! NPO

Benefits of an NPO Number ,[object Object],Access to Govt & corporate funding NPO becomes a body corporate Discounts – Civic Venues hired, adverts etc. NPO

1970 2010 Organisations Donor NPO

[object Object],NPO No. & Obligations 3. Submit Financial Statements – 6 months after year end NPO 1. Receipt all monies

Voluntary registration for Tax Exemption “ Only if the NPO is officially tax exempt can it enjoy the benefits that SARS offers “

Formal Tax-Exempt Status TAX BENEFITS Gateway

Trust Deed, Constitution or Memorandum ,[object Object],[object Object],[object Object],[object Object],NO tax-exemption without these clauses NPO

Public Benefit Activities ,[object Object],Religion; Cultural; Health care; Education & Development; Land & Housing; Research; Provision of Funds Conservation & Animal Rights NPO

Fields of Activity ,[object Object],18A Donor tax certificates Rates Exemption Claiming input VAT

Branch of a Foreign Charity can be a PBO ,[object Object],[object Object],Enjoys same benefits as local PBO

Public Benefit Organisation (PBO) ,[object Object],BECOMES NPO

NOT TAXABLE ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Tax Exemption = Money in your Pocket

BUSINESS INCOME ,[object Object],[object Object],[object Object],TAXED @ 28%

Tax-free portion of PBOs Business Income Greater of R 150 000 ; or 5 % of PBO’s Gross Income

28 % Income Tax R500 000 Rental Income Rental income R 500 000 R 500 000 R 98 000 R 402 000 R 98 000 Rental Income R 402 000 PBO

Charity Trust Taxed on Business Income Rental / Business income R 500 000 Exempt portion 150 000 ---------------- Rent taxable 350 000 28 % Income Tax R 98 000

PBO Relying on Rental Income Rental income R 500 000 Exempt portion 150 000 Amount taxable 350 000 28 % Income Tax (on R 350k) 98 000 AVAILABLE TO USE R 402 000

[object Object],[object Object],[object Object],[object Object],PBO Relying on Rental Income

NON TAX-EXEMPT NGO ,[object Object],[object Object],[object Object]

Non-PBO 40% Tax Rental Income R 500 000 R 200 000 R 300 000 R 200 000 Rental Income R 300 000 NGO

[object Object],[object Object],Non-PBO Relying on Rent Income

Income Generation & Reduction of Tax ,[object Object],[object Object],[object Object]

2 Types of 18A Bodies ,[object Object],Give funds to others to undertake work

PBOs that can issue Certificates ,[object Object],[object Object],[object Object],18 A Qualifying Activities : 18A money can only be used for these activities

Activities that DON’T qualify ,[object Object],[object Object],[object Object],[object Object]

Types of Donations ,[object Object],In KIND

Get a proper Receipt /Certificate ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object],S 18A BENEFITS Ltd. to 10% of Taxable Income DONORS SAVE TAX

S 18A Benefits to Community ,[object Object],[object Object],[object Object],[object Object],DONORS SAVE TAX 100 000 people = R 90 million a year!

18A Tax NOT claimed is LOST !! Are our Donors missing out on R 100’s m govt help every year ? Donor

Other Tax Savings to Donors ,[object Object],Donations Tax Capital Gains Tax Income Tax and Family Trusts Money In YOUR pocket

Giving Charity Using a Family Trust Donation is Tax-deductible in a Trust R 150 000 is taxed as business income in PBO ! TRUST INCOME 1,000,000 Income 1 000,000 To PBO 150,000 Tax Save 60,000

Donation to Non-Exempt Body Donor takes 20 % R 600 000 - R 100 000 R 500 000 = Donor NOT EXEMPT Org.

Donation to Tax-Exempt Body Donor NO Donations Tax R 600 000 - R nil R 600 000 = PBO

[object Object],[object Object],[object Object],[object Object],[object Object],Heirs receive more Estate Duty - 20 %

Donor DOES NOT pay CGT on gains given to PBO Donor Saves Tax Capital Gains Tax

[object Object],[object Object]

[object Object],NGO Saves Tax TRANSFER DUTY- 8 %

CAPITAL GAINS TAX ,[object Object],PBO does not pay CGT on gains received or made

Rates ,[object Object],Welfare & humanitarian Education & development Health care

VAT ,[object Object],[object Object],[object Object]

CLAIM INPUT VAT ,[object Object],Health Care Welfare and Humanitarian Education

OUTPUT VAT ,[object Object],NO Output VAT Fundraising Donations & Grants

gives back VAT to PBOs Are we missing out on millions on VAT refunds yearly ?

Amateur Sporting Bodies & Recreational Clubs ,[object Object],[object Object]

Conclusion ,[object Object],[object Object],Increase your Funding =

TAX-EXEMPT STATUS ,[object Object],[object Object],www.TaxBenefits4ngos.co.za DONORS use tax incentives to give to YOUR ORGANISATION

Road to financial freedom has OPENED NPO A turning point in your organisation

[object Object],[object Object],[object Object],At TPC we share our 27 years experience to give you a Founding Document that

Visit our website: www. TaxBenefits4ngos .co.za Trust Deeds/ Constitutions & Section 21 Co’s. for NGOs Family Trusts for individuals Estate planning and Wills Accounting Services Administration of Estates Business solutions for Commerce & NGOs Produced by: Cave Man inc (031) 2073323

Benefits of being a Public Benefit Organization

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