SARS: BGR 71 issued re Section 18A re donations in kind

SARS: BGR 71 issued re Section 18A re donations in kind

• 30 May 2024
• SARS Issues
• South African Accounting Academy

Uncertainty exists whether only the nature of the donation of property in kind must appear on the section 18A receipt or whether the amount of such a donation determined under section 18A(3) or (3A) must also be contained on a section 18A receipt.

This BGR provides clarity on the detail that must appear on a section 18A receipt issued by a section 18A-approved organisation to a donor taxpayer for a donation of any property in kind to comply with section 18A(2), and third-party reporting requirements under the Tax Administration Act.

Ruling: Having regard to the provisions of section 18A(1), (2), (3), and (3A), and the purpose of third-party reporting requirement under the TA Act, the information relating to a donation of property in kind that must, in addition to the other mandatory information, be contained on a section 18A receipt is the:

• nature of the donation, which is an adequate and accurate description of the donation of property in kind; and
• amount deemed to be an amount of the deduction of the donation of property in kind determined under section 18A(3) or (3A).

Click here to download the BGR 71:

https://www.sars.gov.za/wp-content/uploads/Legal/Rulings/BGR/Legal-IntR-R-BGR-71-Section-18A-Receipt-Donation-of-Property-in-Kind.pdf

Relevance to Auditors, Independent Reviewers & Accountants:

• The Income Tax Act is yet another piece of legislation that your clients must comply with, and which you must assess compliance with.  If they don’t comply with the relevant laws and regulations, you have certain reporting obligations in terms of NOCLAR (NOn-Compliance with Laws And Regulations) – this could include reporting to management, qualifying your audit opinion, reporting a Reportable Irregularity, etc.
• Tax practitioners play a critical role in bridging the gap between taxpayers and SARS. As legislation, regulations and tax law are continuously changing and evolving, it is of utmost importance for companies and tax practitioners to keep abreast of such changes in so that companies continue to meet their tax obligations, and remain aware of publications by SARS that provide clarity on some issues.

Relevance to Your Clients:

• An taxpayer (company or close corporation) has a duty to comply with the Income Tax Act, and directors have to fulfil their duties accordingly, otherwise they could be held liable.
• As legislation, regulations and tax law are continuously changing and evolving, it is of utmost importance for companies to continue to meet their tax obligations, and remain aware of publications by SARS that provide clarity on some issues.
• A tax exempt entity must ensure that they issue Section 18A receipts that comply with the Act.

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