What if SARS Was Your Next Donor?
Many non-profit organisations (NPOs) don’t realise they could be leaving money on the table. If your organisation pays VAT on expenses, you may be eligible to recover VAT back from SARS — effectively turning SARS into a donor. For most NPOs, VAT seems like a compliance burden — something you pay, not something you benefit from. But what if your next “donor” wasn’t a funder or foundation, but SARS itself?
That’s the idea behind understanding your NPO’s VAT position. In certain cases, NPOs that qualify as welfare organisations can register voluntarily for VAT and claim input tax (refunds on VAT paid for goods and services used in their activities).
In other words, if your organisation qualifies, SARS could be paying money back to you.
So how does it work...
VAT implications
- An NPO that does not make taxable supplies for a consideration may be registered as a VAT vendor if the NPO:
-
- is a welfare organisation; and
- makes taxable supplies (in other words, it does not make only exempt supplies), even if for no charge to its beneficiaries.
- The NPO will be a VAT welfare organisation if it:
- is a public benefit organisation (PBO) that has been approved by SARS (for purposes of income tax exemption); and
- carries on any VAT welfare activity under any of the headings—
- welfare and humanitarian;
- health care;
- land and housing;
- education and development; or
- conservation, environment and animal welfare.
- Consequences if the NPO is a VAT welfare organisation:
- It is deemed to carry on a welfare VAT enterprise.
- It may apply for voluntary VAT registration:
- as a welfare organisation;
- even if it charges R0 to recipients of its welfare activities;
- It must account for output tax on any amounts received, but not on:
- a “donation”, if no “identifiable direct valuable benefit arises or may arise in the form of a supply of goods or services” for the donor (or a connected person);
- a subsidy received from a public authority or municipality;
- amounts received for exempt supplies.
- It may deduct VAT incurred (on the acquisition of goods or services) as input tax:
- to the extent that the VAT has been incurred for purposes of its taxable VAT welfare activities (or for any other taxable VAT enterprise activities, for which a consideration is charged);
- also if the VAT was incurred on entertainment expenses for its VAT welfare activities;
- subject to normal documentary and procedural requirements.
SARS could quite literally, give back — through recoverable VAT which will improve your organisations cashflow. Understanding these VAT rules isn’t just about compliance; it’s about unlocking new opportunities for financial sustainability.
Turning Point offers a zero-cost VAT assessment to help your organisation determine if it qualifies and ensure you’re making the most of every opportunity available.
Email us @ admin@tpcsa.co.za to set up an appointment to see how to unlock real funding for your NPO.
Hello
I would like Turning Point to offer us a zero-rated VAT assessment, our PBO is Bhongweni Chess Club in East London.