In the past, if you made a donation to a qualified section 18A institution, you would have been able to claim a deduction against your income of up to 10% of your taxable income as calculated before allowing any donation deduction.

However, if you made a donation to a section 18A institution that exceeded this 10% limit, the surplus would effectively have been “lost” for your personal income tax benefit. The surplus was not carried forward to the following tax year.

Therefore, if you have a philanthropic nature and made regular and significant donations to approved section 18A institutions, your tax position could have been prejudiced under the old tax legislation.

However, as from years of assessment commencing on or after 1 March 2014, that has changed. The 10% limitation is still in place, but the surplus of the donations that exceed the 10% limitation can now be rolled forward and claimed in the next tax year (also subject to the 10% limitation).

It is just important to remember to always obtain a valid section 18A certificate from the institution, failing which the donation may be disallowed by SARS if the certificate cannot be produced.

Engela Crocker

Tax Manager, Johannesburg