Definition of a “public benefit organisation”

Summary of the corporate structure:

The applicant is a resident trust and approved public benefit organisation.

The founder of the applicant is a resident company.

Proposed transaction:

The applicant was established by company A. The applicant is required by agreement with a third-party donor to make quarterly contributions to socio-economic and enterprise development initiatives in neighbouring communities.

Contributions must be directed toward those in need in a specified geographical area. The proximity and need factors are therefore the criteria according to which beneficiaries are selected.

Projects that are aligned with the applicant’s objectives and public benefit activities are selected based on quantifiable public benefit being demonstrated by a funding application.

The proposed transaction will involve the funding of  four projects: a bakery, vegetable tunnels, a poultry project, and a small manufacturing concern.

The applicant considers that the proposed transaction will benefit the local community as the above projects will result in job creation, skills development, and enterprise development.

Ruling:

The proposed transaction will comply with paragraph (c)(i) of the definition of a “public benefit organisation” in section 30(1) of the Income Tax Act No 58 of 1962.

Find a copy of BPR 371 here.

13/05/2022