A quick step-by-step guide to tax requirements for public benefit organisations

Abstract

When an organisation is registered as a (PBO), the organisation will only qualify for tax exemption to the extent that the profits are derived in furtherance of the main objective of the organisation. There are, however, certain requirements that an organisation has to meet in order to register as a PBO. When referring to an organisation which does not operate on the basis of profit-making, the two terms: non-profit organisation and public benefit organisation are used. As mentioned by Coetzee (2011) these two terms often cause confusion. To the uninformed these particular terms mean the same thing whereas in the tax community they have different meanings and implications. Limited research exists for public benefit organisations and a critical analysis of short guides of foreign countries were done to assist with the creation of the quick step-by-step guide for South Africa. The countries selected for the critical analysis are Ireland, China, Switzerland and the United States of America. These four countries were selected by taking South Africa’s global position into consideration. This study is concluded with the creation of the quick step-by-step guide. This quick step-by-step guide will benefit any person who is in the process of registering an organisation for tax exemption. By making this quick step-by-step guide easily accessible and available to the public in general and especially employees at PBOs, these employees will be able to attend to the application themselves and not be obliged to rely on the services of accounting and law firms which may cause an unnecessary expense for the PBO. AFRIKAANS : Waar ‘n organisasie as ‘n openbare weldaadsorganisasie (OWO) geregistreer is, sal die organisasie slegs vir belasting vrystelling kwalifiseer tot die mate wat die winste gegenereer word ten gunste van die hoof doelwit van die organisasie. Daar is egter sekere vereistes waaraan ‘n organisasie moet voldoen om as a OWO te registreer. Wanneer daar na ‘n organisasie verwys word wat nie op ‘n basis van winsbejag handel nie, word die volgende terme nie-winsgewende organisasie en openbare weldaadsorganisasie gebruik. Soos deur Coetzee (2011) genoem, kan hierdie twee terme verwarring veroorsaak. Vir die oningeligte kan hierdie twee terme dieselfde betekenis dra, terwyl die terme vir die belastinggemeenskap verskillende betekenisse en implikasies het ‘n Beperkte hoeveelheid navorsing is beskikbaar vir OWOs, daarom is ‘n kritiese analise gedoen van buitelandse kort handleidings om mee te werk met die skep van die vinnige stap-vir-stap handleiding vir Suid-Afrika. Die lande wat ingesluit is in die kritiese analiese is Ierland, China, Switzerland en die Verenigde State van Amerika. Die vier lande is gekies deur Suid-Afrika se globale posisie in ag te neem. Die studie word met die skep van die vinnige stap-vir-stap handleiding afgsluit. Die vinnige stap-vir-stap handleiding sal tot voordeel wees vir enige persoon wat in die proses is om ‘n organisasie vir belastingvrystelling te registreer. Deur die vinnige stap-vir-stap handleiding maklik bekombaar en beskikbaar te maak vir die algemene publiek en werknemers by OWOs, stel dit die werknemers in staat om self die registrasies te doen en nie verplig word om op die dienste van die rekeningkundige- en prokureursfirmas, wat onnodige kostes kan meebring, staat te maak nie.