Partner with Bambanani Projects and earn BBBEE points
We are privileged in South Africa to form part of a regime where the environment has been created where corporate-social projects are not only encouraged, but also rewarded. Through Broad-based Black Economic Empowerment (Socio-Economic Development or SED), one of the seven components of a Broad-based BEE Scorecard are addressed.
Through SED, companies are encouraged to contribute any amount of SED budget to projects or initiatives that adhere to the requirements of the BBBEE Codes of Good Practice. It then allows the donating or sponsoring company to claim points for 1% contribution of net after tax profit, under the particular Code.
SED contributions can be monetary or non-monetary. Non-monetary contributions should be converted to financial value in order to claim points. The full value of SED contributions made to beneficiaries is recognized if at least 75% of the value directly benefits black people. If not, the value of the contribution will be multiplied by the percentage that benefits black people only.
The SED Scorecard
Qualifying Contributions are measurable on the following basis:
A = (B/C) x D
A is the score achieved in respect of the Qualifying Contributions made by the Measured Entity
B is the value of all Qualifying Contributions made by the Measured Entity measured from the commencement of this statement or the inceptions date of the date of measurement
C is compliance target in respect of the Qualifying Contributions as specified in the scorecard of Statement 500 (paragraph 2.1)
D is the weighting points allocated to the measured enterprise development criteria under the scorecard for Statement 500
Partner with Bambanani Projects and get a tax deduction
The above donation is also supported through a proper TAX structure. Should you or your company make a contribution to the different projects in Bambanani Projects, you or your company will receive an Article 18A certificate with which the amount that has been donated can be deducted against its own taxable income. In other words, in more ways than one the donation will add value to you or your company.
The following is an extract from an article written by Don Howell, Tax Partner at Grant Thorton and gives a very good overview of tax deductible donations.
To whom can you donate? Qualifying organisations
- You will only qualify for a tax deduction if your donation was made to approved public benefit organisations and certain qualifying institutions (approved organisations).
- There are numerous regulations that determine whether an organisation qualifies as approved organisations. If you wish to qualify for a tax deduction, you need to establish if the beneficiary of your donation can issue a receipt as intended under section 18A of the Income Tax Act, No. 58 of 1962 (the Act).
How much can you claim as a tax deduction?
- Taxpayers, natural persons, trusts, companies, or close corporations can deduct from their taxable income, the amounts they donated to approved organisations, up to the value of 10 percent of their taxable income.
- For natural persons, the term taxable income refers to the taxpayer’s taxable income, whether derived from trade or from a non-trading source, and after allowing all permitted deductions, but before this donations deduction. Taxable income excludes any retirement lump sum benefit, retirement lump sum withdrawal benefit and severance benefit. However, it includes taxable capital gains.
- The donation must actually be paid or transferred during the year of assessment in order to qualify for a tax deduction in such tax year.
An incentive to give more now. Roll over treatment of excess
- As from 1 March 2014, any donations in excess of the 10 percent limit will be rolled over and carried forward to the succeeding year of assessment. It will thus be deemed a donation actually paid or transferred during the succeeding year.
- This rollover treatment will continue to apply in respect of any future excesses.
More ways to give. Payroll giving
- Your donation can also reduce your monthly employees tax (PAYE), if your employer agrees to process such through its payroll.
- Essentially, any donation made, limited to five percent of your salary (subject to certain allowable deductions) can be deducted from your salary before PAYE is calculated. However, these requirements must also be met:
- The beneficiary must be an approved organisation;
- The donation amount is deducted from your salary and paid to the approved organisation on your behalf;
- The approved organisation must issue the section 18A certificate to your employer;
- Your employer must reflect the full amount of the donation, not only the five percent, on your IRP5 certificate.
- The IRP5 certificate will suffice as the supporting documentation required to claim the tax deduction on your annual tax return.
What else can you give and how will it work? Donations other than cash
- Your donation can be in the form of cash or property in kind.
- If you donate property in kind and it qualifies for the section 18A deduction, the deemed donation amount will be dependent on whether the donation is in the form of trading stock, trading assets or other assets.
- If the donation is in the form of immovable property, which is of a capital nature, and the cost does not exceed the lower of the market value or municipal value, the deemed donation will be calculated according to a set formula.
Donations are made in terms of Section 18A of the Income Tax Act, 1962 (Act No. 58 of 1962): It has been declared that donations be made exclusively for the purpose of Public Benefit Activities as listed in Part II of the Ninth Schedule to the Income Tax Act, 1962 (Act No. 58 of 1962), that qualifies such donation to be exempted from Income Tax in terms of Section 18A of the Income Tax Act, 1962 (Act No. 58 of 1962).
If you donate to Bambanani Projects, we will use your donation to enhance the country in one of the following Article 18A certificate accredited fields:
• Welfare and humanitarian
• Health care
• Education and development
• Conservation, environment and animal welfare
• Land and housing
You are also welcome to specify in which area or project you want to contribute.
For both money or goods that are donated an Article 18A certificate will be issued.
When donating, just remember to provide us with your full name / company name, I.D. / Company registration number, tax reference number, address and contact number.