AWQAF SA is approved as a Public Benefit Organization (PBO) in terms of S30 of the Income Tax Act. Awqaf SA is exempt from certain taxes (see A) below) and Donors have certain benefits (see B) below).
A) Awqaf SA Tax Exemptions
AWQAF SA is tax exempt in terms of S10(1)(cN) of the Income Tax Act and has the following tax and duty exemptions:
Income Tax: All income (receipts and accruals) of whatever nature of AWQAF SA are exempt from Income Tax
Donations tax: Any donation made by or to AWQAF SA is exempt from Donations Tax (normal levy 20%). Further, the donor would be exempted from payment of Capital Gains Tax if he/she became liable as result of the donation.
Estate Duty: Any property or asset bequeathed to AWQAF SA is excluded from the value of the estate and therefore not subject to Estate Duty (normal levy: 20%)
Transfer Duty: AWQAF SA is exempt from the payment of transfer duty on on property acquired, provided that the whole or substantially the whole property will be used for the purpose of carrying on one or more approved PBA. Conditions apply.
Stamp Duty: AWQAF SA is exempt from the payment of stamp duties eg on cheque accounts)
Skills Development Levy: AWQAF SA is exempt from the payment of SDL (if solely carries on an approved PBA)
Capital Gains Tax: AWQAF SA is exempt from Capital Gains Tax. Further, where a person donates an asset which would have resulted in a liability for CGT, an exemption is provided where AWQAF SA is the recipient.
B) Donor Tax Deductions & Exemptions
Deduction by Donor – S18A(1)(b): AWQAF SA has been approved for the purposes of S18A(1)(b) of the Act. In terms of this section up to 10% of taxable income (before medical expenses) can be claimed as a deduction by the donor for a specific S18A(1)(a) activity ie as stipulated in Part II of the ninth Schedule to the Income Tax Act.
In this regard this means that:
1) the donor does not pay donations tax
2) the donation to Awqaf SA falls outside his/her standard R100000 allowed maximum
3) the donor will not be liable to capital gains tax.
4) the donation to AWQAF SA is deductible from taxable income to the extent of 10% of taxable income (before the deduction for medical expenses).
5) amounts beyond the 10% limit may be rolled over in subsequent years.
(Donors are requested to discuss with their financial advisor or with Awqaf SA).
For further information on Tax Deductions via S18(A), kindly refer to Part II of the Ninth Schedule to the Income Tax Act.