Following our September issue “All Systems Go (or not)” which , if you missed it, can be accessed here: https://ngolawsa.co.za/ngolaw-brief-september-2025/
This Brief contains some links to useful resources and engagements, some of which will be explained in this Brief (with links in each section) but, for those in a hurry, are also listed here:
THE 18A RECEIPTS AND THIRD PARTY RETURNS: NEW INFORMATION REQUIRED
It seems like just the other day, but it was back in 2023 when SARS started preparing the ground to introduce a requirement for organisations to report to SARS on all of the 18A receipts issued to donors, through what are called ‘third party’ returns. For the full explanation of that, see our 2023 Brief https://ngolawsa.co.za/second-quarter-2023-ngolaw-in-brief/
31 May 2024 was the start of compulsory filing of these returns, and you can read more about that in https://ngolawsa.co.za/welcome-to-the-first-ngolaw-brief-of-2024/.
These ‘third party’ returns are an important mechanism to allow SARS to establish whether donors who are claiming a tax deduction for making a donation to a non-profit have actually made the donation, and how much they have really donated. Without these linking of systems at SARS, fraudulent claims of donations made would only be caught if the taxpayer was audited.
Although the requirement to file these returns places an extra administrative burden on non-profits, it is necessary to stem fraud and (hopefully) encourage actual donations being made to get the tax benefit.
Because there is certain information which needs to be reported to SARS, the 18A receipts which are issued need to contain all of these fields, so that the information is captured and can be reported on.
And SARS has just issued a notice in the Government Gazette Legal Counsel – Secondary Legislation – Income Tax Notices 2025 | South African Revenue Service adding the following compulsory fields:
- The income tax number of the donor;
- In the case of a donation of a thing instead of money an ‘adequate and accurate description’ of what has been donated; and
- If a thing has been donated, the value of the thing, according to the SARS rules, which are set out in section 18A(3) and 18A(3A) of the Act.
We find that people can tend to be secretive about their income tax numbers. We are not sure why, as SARS is exceptionally good at privacy, it is fundamental to how they work. Also, I cannot think what the risk would be- that someone to pays my tax for me? Whatever the reason, if I donor wants their tax deduction to be granted by SARS, you have to report their income tax number, and so you have to collect it from them.
In the case of donations of property/things, 18A receipts can be issued and tax deductions claimed, but there are some limits:
- They cannot be ‘intangible’ (not physical) unless they are shares in a listed company OR a ‘financial instrument’ which is share-like in having an ascertainable value (bonds, money market securities, derivative instruments etc) listed in the definition of ‘financial instrument’ in the Financial Sector Regulation Act, 2017;
- They certainly cannot be time or services donated, these are not on the list; and
- The values are determined under the strict provisions of sections 18A(3) and 18A(3A)
The following is our brief summary of these rules:
| 18A (3) | Immovable property | Lower of market or municipal value |
| (a)(i) | Financial instrument which is trading stock of donor (stocks, bonds, shares) | Lower of fair market value on date of donation or Section 22(8)(C) value |
| (a) (ii) | Any other trading stock of donor (things the donor sells) |
|
| (b) | Asset used for trade (but not trading stock, eg computers, office furniture) | Lower of fair market value or cost less any tax allowance |
| (c) | Not trading stock or asset used for trade | Lower of fair market value or cost less depreciation allowance |
| (d) | If it is created/assembled/ bought in order to give | Lower of fair market value or cost to taxpayer |
NPO ONLINE APPLICATIONS AND REPORTS: LACK OF PROGRESS REPORT
As mentioned in our previous Brief, DSD (Department of Social Development) has been upgrading its NPO registration and reporting system and going entirely online, with:
- New applications to be made only online from 1 September 2025; and
- NPO online reporting effective from 1 October 2025.
Sadly, although the online reporting was only set to be launched on 1 October, DSD had, from 1 September, disabled the ability to receive attachments not only for the email address for new applications (which makes sense) but also for the email addresses used for NPO updates and reports.
At date of writing, the NPO application system is partly working, but we have not yet been able to file a single online report (and we try every day). And those email address receipt facilities are still disabled, so there is no back up plan available.
For organisations with financial year ends of end February, their reports are due on 30 November, and for 31 March year ends, these should be lodged by the end of December (or before we all go on leave).
We are in very regular communication with the NPO Directorate on this.
New NPO applications which are made for voluntary associations are more likely to be successful, as there is less integration required with other government databases;
- For NPCs, the links to the CIPC database are misbehaving, currently recording multiples of some directors, then nothing of the rest;
- We have no data on Trust applications, since we no longer set up new trusts (for reasons that anyone who operates under a trust will be familiar with.
For NPO reporting, many of our trials so far have been thwarted by this message:
This is apparently because the data from the old system needs to be ‘migrated’ into the new system, before reports can be filed. Sometimes, just to keep us on our toes, we get a different error- an organisation that we didn’t ask about displayed, and then we get stuck at that point and there is no way to correct it.
We have not yet managed to lodge a single report on the new system.
We have been assured by the NPO Directorate officials that there is no need to panic, they are working on the systems and no organisation will be deregistered or marked as non-compliant for an inability to lodge reports at this time. We hope to bring you better news in the next Brief.
Moving quite a bit faster than DSD: Our Ali (NPO reporting team leader!) , who was part of the KZN ladies 55-59 years team in the SA Cross Country Championships in September, which brought home the gold medal!
THE GREY UN-LISTING AND WHAT NEXT?
South Africa was ‘grey-listed’ by the Financial Action Task Force February 2023. For those who have not been following, the FATF assesses countries around the world to determine, according to their criteria, which countries are at risk of allowing money-laundering and terrorist financing to occur within their borders. Countries which are really terribly at risk are ‘black listed’ and there are only three (Democratic People’s Republic of Korea, Iran and Myanmar). Twenty countries are on the current grey list, which can be found here https://www.fatf-gafi.org/en/countries/black-and-grey-lists.html
The following from the FATF website report on South Africa at https://www.fatf-gafi.org/en/publications/High-risk-and-other-monitored-jurisdictions/increased-monitoring-october-2025.html
“The FATF welcomes South Africa’s significant progress in improving its AML/CFT regime. South Africa strengthened the effectiveness of its AML/CFT regime to meet the commitments in its action plan regarding the strategic deficiencies that the FATF identified in February 2023, by….:South Africa should continue to work with the FATF and ESAAMLG to sustain its improvements in its AML/CFT system.
For perspective from the non-profit perspective, see Feryal Domingo (long!) Acting Executive Director of Inyathelo’s views here https://www.inyathelo.org/mediacentre/newsandopinions/inyathelo-hails-south-africa%E2%80%99s-grey-list-removal,-paving-the-way-for-robust-npo-fundraising-and-global-re-engagement
“This is a victory for the thousands of NPOs whose work is vital to our democracy and social justice. The global community can now confidently re-engage with our non-profit sector, knowing that we have robust systems in place to promote transparency and accountability,” said Domingo.
We will not, of course, be able to rest on our laurels for long, as FATF assessments are ongoing, and SA is due to be reviewed again in April 2027, and we are expected to be able to report further progress at that time.
Of grave concern to civil society is how the non-profit sector across the world has been scapegoated for apparently harboring risks of money laundering and terrorist financing. You may recall how, in 2022, we narrowly escaped the tentacles of the proposed mandatory registration of all non-profits through submissions made, see the background here https://ngolawsa.co.za/last-quarter-2022-ngolaw-in-brief/
The FATF ratings and requirements have in many countries been abused by politicians to control and silence civil society. Compulsory registration and reporting requirements in many jurisdictions are being used to effectively ban human rights work which may be counter to government policies, or critical of government.
The response from civil society has been to galvanise and organise and FATF has taken notice and modified its approach, acknowledging that “the misapplication of the FATF Standards can lead to unintended consequences such as the illegitimate targeting and suppression of legitimate non-profit organisations”. https://www.fatf-gafi.org/en/topics/non-profit-organisations.html?utm_source=chatgpt.com
Members of the NPO Working Group have been actively involved in this work with FATF, and this is an extract from a submission on the National Corruption Risk & Prevention Framework drafted by our own Ann Bown:
“In line with the Financial Action Task Force (FATF) Recommendations 12 and 22, and the Financial Intelligence Centre (FIC) PEP Guidance Note 3A (para 25/26), we recommend that the NCRMPF acknowledge NPOs as a moderate-risk sector. Not as a source of corruption, but as an essential partner in mitigating risks through improved governance, transparency, and accountability”.
Keep the questions coming and send us suggestions for future topics – visit our website, hit the ‘contact’ tab, and enter your question into the ‘Contact Form’ space provided.
Aluta continua
Nicole, Bandile, Janice, Chelsea, Lisa, Alison, Asanda, Ayanda and Dorothy
