A common misconception is that taxpayers may deduct donations made to any charity organisation or a non-profit organisation (“NPO”). This is incorrect. Rather, a taxpayer may in certain circumstances deduct donations made to public benefit organisations (“PBOs”) approved in terms of section 18A of the Income Tax Act No. 58 of 1962 (“the Act”) upon the issue of a section 18A receipt (adhering to certain requirements) by that PBO.

PBOs are charitable organisations that are approved by SARS. All approved PBOs are exempt from income tax, but only certain PBOs have the additional necessary approval to issue 18A receipts entitling a donor to a tax deduction. The following demonstrates this diagrammatically:

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