1. In terms of Section 10(1)(cA)(i) of the Income Tax Act, 2000 (Act 30/2000) all schools are exempted from the payment of income tax. Please note, however, that this exemption may be withdrawn in respect of any public school, which engages in trading activities that do not focus wholly or mainly on the promotion of its principle object as educational institution.
2. In terms of Section 18A of the above-mentioned act, as amended by the ninth schedule of the Income Tax Act, (Act 30/2002), the South African Revenue Services (SARS) has granted approval for the group registration of all public schools to issue receipts to donors in terms of the above-mentioned Section 18A. The reference number issued to all public schools in the Western Cape for this purpose is 930000327. At the request of SARS the practice of applying for registration individually in terms of Section 18A must be discontinued.
3. Registration in terms of Section 18A allows for tax rebates in respect of donations for specific educational projects, excluding school fees. The tax rebate is subject to the limitations contained in Section 18A and will only be considered if the receipt and tax certificate, as issued by the educational institution concerned, are submitted with the annual tax return.
4. No tax rebate will be granted if the Commissioner has any reason to believe that an educational institution has issued a Section 18A certificate to a donor for school fees or non-educational purposes. Abuse of donations in terms of Section 18A could result in the withdrawal of the registration of Western Cape Education Department schools as Public Benefit Organisations and will consequently deprive schools of the opportunity to raise additional funds for educational purposes.
5. The procedures and requirements regarding the administration of Section 18A receipts are contained in the Guidelines and minimum requirements with regard to receipts, which this office will issue shortly by means of a circular.
6. Institutions requiring Section 18A receipt books must apply in writing to the Deputy Director at their Educational Management and Development Centre (EMDC). Before the EMDC will issue such a receipt book, it will ensure that the institution has the necessary internal controls in place to be able to adhere to the procedures and satisfy the requirements of the Department and SARS.
7. Principals and school governing bodies may request their EMDC for support regarding procedures and requirements, for instance the annual reporting concerning the issuing of Section 18A receipts for the tax year 1 March to 28 February.
8. Please bring the contents of this circular to the attention of all persons concerned, including parents.


SIGNED: L.J. ELY
HEAD: EDUCATION
DATE: 2004:11:17