SARS Is Increasing Enforcement on NPO Compliance on Section 18A and IT3(d)
In the past few days, we have seen multiple NPOs receive formal notices from SARS indicating its intention to withdraw their PBO status and Section 18A status, with only 21 business days to respond.
This is not an isolated development. This is a clear and deliberate enforcement shift by SARS – and in our 25 years of working in the NPO sector, we have not seen this level of scrutiny before.
By way of example, in recent correspondence issued by SARS:
- Organisations have been formally notified of non-compliance with section 30 requirements,
- Outstanding IT12EI returns and IT3(d) submissions have been specifically highlighted, and
- SARS has clearly indicated its intention to withdraw exemption status within 21 business days if corrective action is not taken
Why this matters – The consequences are severe
The withdrawal of PBO status is not administrative, it is catastrophic from both a tax and operational perspective:
- The organisation becomes a fully taxable entity (including taxation on donations received)
- Donations tax exposure may arise for donors
- Loss of ability to issue Section 18A certificates
- Loss of VAT concessions applicable to PBOs
- Transfer duty and CGT exposure on assets
- Significant reputational damage with donors and stakeholders
- Cash flow strain due to increased tax burden and reduced funding
What SARS is focusing on:
Based on the letters issued, SARS is specifically targeting:
- Failure to submit income tax returns (IT12EI)
- Failure to submit IT3(d) returns
- Incomplete or incorrect Section 18A reporting
- General non-compliance with section 30 requirements
Importantly, many of these are administrative compliance failures, not intentional wrongdoing.
How we can assist
At Turning Point Chartered Accountants, we are actively assisting NPOs to proactively manage this risk and restore compliance.
Our support includes:
- Full SARS compliance health checks (PBO, VAT, Section 18A, IT3(d))
- Identification and correction of non-compliance gaps
- Preparation of SARS responses and representations
- Assistance with backlog submissions and regularisation
- Structuring of robust compliance processes going forward
Our message to you
This is not something to delay.
SARS has clearly demonstrated that it is now actively enforcing compliance, and willing to withdraw PBO status where requirements are not met.
Many organisations only become aware of issues when it is already too late and we therefore recommend your organisation undertakes a proactive compliance review as soon as possible.
If your organisation would like assistance in reviewing its compliance position, you are welcome to contact us directly on admin@tpcsa.co.za.
“In today’s environment, compliance is no longer optional, it is foundational to the sustainability and credibility of your organisation.”