SARS Interpretation Note 143: Income tax exemption: Registered political party (source: https://www.sars.gov.za/legal-intr-in-143-income-tax-exemption-registered-political-party/) INTERPRETATION NOTE 143 DATE: 13 January 2026 ACT : INCOME TAX ACT 58 OF 1962 SECTION : SECTION 10(1)(cE) SUBJECT : INCOME TAX EXEMPTION: REGISTERED POLITICAL PARTY Contents Preamble.............................................................................................................................. 2 1. Purpose .................................................................................................................... 4 2. Background ............................................................................................................. 4 3. The law ..................................................................................................................... 5 4. Application of the law ............................................................................................. 5 5. Meaning of political party ....................................................................................... 5 6. Registration of a political party .............................................................................. 7 7. Funding .................................................................................................................... 9 7.1 Statutory regulatory framework of political funding .................................................. 10 7.1.1 Political Funding Act ................................................................................................ 10 7.1.2 Promotion of Access to Information Act ................................................................... 12 8. Income tax exemption ........................................................................................... 13 9. Exemption from other taxes ................................................................................. 14 9.1 Capital gains tax ...................................................................................................... 14 9.2 Donations tax .......................................................................................................... 15 9.3 Skills development levy ........................................................................................... 15 10. Compliance with other taxes and duties ............................................................. 16 10.1 Dividends tax ........................................................................................................... 16 10.2 Employees’ tax ........................................................................................................ 17 10.3 Securities transfer tax .............................................................................................. 18 10.4 Transfer duty ........................................................................................................... 18 10.5 Unemployment insurance fund contributions ........................................................... 19 10.6 Value-added tax ...................................................................................................... 19 11. Section 18A tax-deductible receipts .................................................................... 20 12. Reporting requirements ........................................................................................ 20 12.1 Income tax returns ................................................................................................... 20 13. Administrative provisions..................................................................................... 22 13.1 Furnishing of information ......................................................................................... 22 13.2 Changes in registered particulars ............................................................................ 22 13.3 Record-keeping ....................................................................................................... 23 13.4 Representative taxpayer .......................................................................................... 23 13.5 Objection and appeal............................................................................................... 28 14. Conclusion ............................................................................................................. 29 Preamble In this Note unless the context indicates otherwise – • “CGT” means capital gains tax, being the portion of income tax payable by a taxpayer on a taxable capital gain arising from the disposal of assets determined under the Eighth Schedule; • “Constitution” means the Constitution of the Republic of South Africa, 1996; • “Commission” means the Electoral Commission established under section 3 of the Electoral Commission Act; • “Commissioner” means the Commissioner for the South African Revenue Service appointed under section 6 of the South African Revenue Service Act 34 of 1997, or the Acting Commissioner designated under section 7 of that Act; • “Companies Act” means the Companies Act 71 of 2008; • “Electoral Act” means the Electoral Act 73 of 1998 that, amongst other things, regulates elections of the National Assembly, the provincial legislatures and municipal councils; • “Electoral Commission Act” means the Electoral Commission Act 51 of 1996 that, amongst other things, makes provision for the establishment and composition of an Electoral Commission to manage elections for national, provincial and local legislative bodies and referenda; and to make provision for the establishment and composition and the powers, duties and functions of an Electoral Court; • “Electoral Matters Amendment Act” means the Electoral Matters Amendment Act 14 of 2024 that, amongst other things, amends the Political Funding Act; • “Funds” as defined in section 1 of the Political Funding Act mean the Multi- Party Democracy Fund and the Political Representatives Fund; • “Income Tax Act” means the Income Tax Act 58 of 1962; • “NPO Act” means the Nonprofit Organisations Act 71 of 1997; • “PAIA” means the Promotion of Access to Information Act 2 of 2000 that, amongst other things, gives effect to the constitutional right of access to any information held by the State and any information that is held by another person and that is required for the exercise or protection of any rights; • “Political Funding Act” means the Political Funding Act 6 of 2018 that, amongst other things, provides for, and regulates, public and private funding of political parties, independent candidates 1 and independent representatives; 2 • “registered party” as defined in section 1(1) of the Electoral Commission Act means any party registered under section 15 of that Act; • Regulations for the Registration of Political Parties” mean the regulations made by the Commission under section 23 of the Electoral Commission Act published in Government Notice Regulation 13 in Government Gazette 25894 of 7 January 2004; • “Regulations on Party Liaison Committees” mean the regulations made by the Commission under section 23 of the Electoral Commission Act published in Government Notice Regulation 824 in Government Gazette 18978 of 19 June 1998; 3 • “Schedule” means a Schedule to the Income Tax Act; • “SDL” means skills development levy; • “SDL Act” means the Skills Development Levies Act Act 9 of 1999; • “STT” means securities transfer tax; • “STT Act” means Securities Transfer Tax Act 25 of 2007; • “TA Act” means the Tax Administration Act 28 of 2011; • “Trust Property Control Act” means the Trust Property Control Act 57 of 1988; • “UIF” means unemployment insurance fund; • “VAT” means value-added tax; • “VAT Act” means the Value-Added Tax Act 89 of 1991; and • any other word or expression bears the meaning ascribed to it in the Act. All guides, public notices and returns referred to in this Note are available on the SARS documents should be consulted. 1 The term “independent candidate” as defined in section 1 of the Political Funding Act, inserted by section 3(d) of the Electoral Matters Amendment Act, means a South African citizen contesting an election and who is not nominated on a list of a party. 2 The term “independent representative” as defined in section 1 of the Political Funding Act, inserted by section 3(d) of the Electoral Matters Amendment Act, means an independent candidate with representation in the national or a provincial legislature. 3 The term “political liaison committee” was inserted by section 1(f) of the Electoral Amendment Act and means a committee established under the Regulations on Political Liaison Committees published under the Electoral Commission Act. Section 12 of the Interpretation Act provides that if legislation is repealed and replaced, any reference to the old Act, is deemed to be to the replaced Act. Any reference to the deleted term “party liaison committee” should therefore be a reference to the inserted term “political liaison committee”. 1. Purpose This Note provides guidance on the interpretation and application of the exemption from income tax under section 10(1)(cE) of the receipts and accruals of any political party registered under section 15 of the Electoral Commission Act. 2. Background According to the Constitution, all adult citizens are entitled to vote in elections for any legislative body created by the Constitution. 4 Citizens are also assured the right to free, fair, and regular elections for these bodies. 5 Additionally, the Constitution guarantees each citizen’s right to make political choices, which encompasses – 6 • forming a political party; • participating in the activities of a political party or recruiting its members; and • campaigning on behalf of a political party or a particular cause. Chapter 9 of the Constitution 7 establishes certain state institutions to support and uphold constitutional democracy. Amongst these, the Commission is specifically identified, with its constitutional duties including – 8 • overseeing the conduct of elections for national, provincial, and municipal legislative bodies as required by national legislation, • ensuring that these elections are conducted freely and fairly, 9 and • declaring the outcomes of such elections within the shortest period allowed by national legislation. The Constitution also states that the Commission is granted further powers and functions as determined by national legislation. 10 The Electoral Commission Act was enacted to give effect to this constitutional requirement by formally establishing the Commission 11 and outlining its extended powers and functions. 12 These include, amongst other things, compiling and maintaining a register of political parties, 13 as well as fostering liaison and co-operation with political parties, 14 independent representatives, and independent candidates. In My Vote Counts NPC v Minister of Justice and Correctional Services and another, the Constitutional Court recognised that political parties and independent candidates are the constitutionally designated means for attaining public office. However, it was observed that running a successful campaign for public office typically requires significant financial resources. Many candidates lack sufficient funding to conduct an effective campaign without outside support. While the State does offer some financial 4 Section 19(3) of the Constitution. 5 Section 19(2) of the Constitution. 6 Section 19(1) of the Constitution. 7 Section 181(1)(f) of the Constitution. 8 Section 190 of the Constitution. 9 Section 19(2) of the Constitution. 10 Section 190(2) of the Constitution. 11 Section 3(1) of the Electoral Commission Act. 12 Section 4 of the Electoral Commission Act. 13 Section 5(1)(f) of the Electoral Commission Act. 14 Section 5(1)(g) of the Electoral Commission Act. 15 2018 (5) SA 380 (CC) at 1 and 31. assistance to political parties for their activities, including campaigning, this support seems to fall short of which is needed to operate an effective political organisation or election campaign. As a result, there is a need for considerable financial contributions from the private sector or individuals to bridge the gap. An independent candidate or representative, based on the definitions of “party”, “independent candidate”, and “independent representative” in the Electoral Commission Act, do not qualify for this exemption. Therefore, this Note focuses exclusively on registered political parties, as they are currently the only entities eligible for the exemption under section 10(1)(cE). 3. The law Section 10(1)(cE) 10. Exemptions.—(1) There shall be exempt from normal tax— (cE) the receipts and accruals of any political party registered in terms of section 15 of the Electoral Commission Act, 1996 (Act No. 51 of 1996); 4. Application of the law The receipts and accruals of any registered political party (see 6) are exempt from income tax 16 under section 10(1)(cE) (see 8). This exemption is automatic, does not require any application or approval, and is not subject to the Commissioner’s discretion. As a result, the Commissioner does not issue confirmation letters regarding this exemption. If the political party is registered under the Electoral Commission Act, all its receipts and accruals are automatically exempt from income tax. While section 10(1)(cE) uses the board term “any political party”, its scope may be limited by the context or subject matter. 17 It is therefore important to clearly determine what constitutes a political party registered under the Electoral Commission Act, as these registered parties not only benefit from full income tax exemption but also from being exempt from certain other taxes and duties (see 9). 5. Meaning of political party The words “political party” are not defined in the Income Tax Act and should therefore be interpreted according to its ordinary meaning, based on the context in which it appears. 18 The Collins Dictionary describes “political party” as – 19 “an organization of people who share the same views about the way power should be used in a country or society (through government, policy-making, etc)”. 16 The term “normal tax” as defined in section 1(1) means income tax referred to in section 5(1). 17 CIR v Ocean Manufacturing Ltd 1990 (3) SA 610 (A), 52 SATC 151 at 161. 18 Kellaway, E. A. (1995). Principles of legal interpretation of statutes, contracts and wills at page 224. Butterworths South Africa. Also, see Steyn, L. C. (1981). Die uitleg van wette (Fifth Edition) pages 4 to 7. Juta and Company (Pty) Ltd. 19 www.collinsdictionary.com/dictionary/english/political-party [Accessed 13 January 2026]. The Constitutional Court in Minister of Defence and Military Veterans v Thomas 20 held that, generally, definitions from other statutes should not be used to interpret a different statute. When Parliament defines a term within in a statute, it signals an intention for that term to have a specific, not an ordinary meaning. However, if other statutes address similar subject matter, their definitions may be relevant, depending on the context and subject matter. Section 10(1)(cE) of the Income Tax Act refers to political parties that are registered under the Electoral Commission Act. While the Electoral Commission Act does not specifically define “political party”, it does provide a definition for term “party”. Therefore, when interpreting and applying section 10(1)(cE) of the Income Tax Act, it is appropriate to rely on the definition of “party” in the Electoral Commission Act, considering its purpose and context. The term “party” as defined in the Electoral Commission Act means – 21 “any registered party, and includes any organisation or movement of a political nature which publicly supports or opposes the policy, candidates or cause of any registered party, or which propagates non-participation in any election.” The Electoral Commission Act defines the term“ registered party” to mean any party registered under section 15 of that Act. 22 In My Vote Counts NPC v Minister of Justice and Correctional Service and another, Mogoeng CJ held the following: 23 “A juristic person is by the way an entity or association that possesses attributes such as perpetual succession, the capacity to acquire certain rights apart from its members and to sue or be sued in its name or through its institutional head. This legal personality status is conferrable either by legislation or the common law. Legislation that creates an entity like a university or state-owned enterprise ordinarily bestows legal personality upon that entity. And it is a statutory precondition for the incorporation or registration of some entities that they be juristic persons with the legal capacity to sue or be sued. Other entities could derive their legal personality from their constitutions. Political parties are neither created by legislation nor required by any legislation to be juristic persons. But, they can in terms of their constitutions clothe themselves with juristic personality, including the capacity to sue or be sued. In all probability, most political parties are juristic persons.” Political parties typically publish an official election manifesto setting out their policy positions, such as on the economy, healthcare, education, and unemployment, which they commit to implementing if elected. These manifestos are made accessible to the public through various means, including the parties’ official websites and media outlets. 24 20 2016 (1) SA 103 (CC). 21 Section 1(1) of that Act. 22 As above. 23 2018 (5) SA 380 (CC) at 64 and 65. 24 People’s Assembly. (13 May 2024). Manifestos ahead of the national elections 2024. Available online at www.pa.org.za/blog/manifestos-ahead-national-elections-2024#:~:text=An% 20election%20manifesto%20serves%20as,the%20foundation%20for%20its%20campaign [Accessed 13 January 2026]. Some political parties create independent entities to conduct activities like political education and training. However, these separate entities do not qualify for exemption under section 10(1)(cE) of the Income Tax Act unless they can prove 25 that they are registered as political parties under the Electoral Commission Act (see 6). Additionally, political parties may form different organisational structures or campaign teams to run election campaigns or support internal leadership contests. The receipts and accruals of these campaign teams are also not eligible for exemption under section 10(1)(cE) of the Income Tax Act. 6. Registration of a political party To register a political party under the Electoral Commission Act, an application 26 must be submitted to the chief electoral officer 27 using the required format and procedure. 28 The application must include a deed of foundation, 29 adopted at a meeting and signed by the required number of qualified voters, 30 and a constitution. 31 The constitution 32 must as a minimum set out the – 33 • executive structure of the political party; • procedure for electing the executive; • decision-making process and the roles of office bearers; • minimum requirements for membership; • internal disciplinary procedures, and • requirements for audited financial statements. Once a political party has been registered, the chief electoral officer issues a registration certificate. 34 The key details 35 of this registration are then published in the Government Gazette. 36 From that point forward, the party is recognised as a “registered party”. 25 Section 102(1)(a) of the TA Act. 26 Section 15(1) of that Act. 27 The term “chief electoral officer” as defined in section 1(1) of the Electoral Commission Act read with section 12(2)(a) of that Act, means the head of the administration of the Commission. 28 The application form according to paragraph 2(1)(a) of the Regulations for the Registration of Political Parties must be substantially similar to Annexure 1 to those Regulations. 29 Annexure 6 to the Regulations for the Registration of Political Parties provides a specimen deed of foundation. 30 Section 15(3)(a) of the Electoral Commission Act read with paragraph 3 of the Regulations for the Registration of Political Parties. 31 Section 15(3)(c) of the Electoral Commission Act. 32 A registered party under section 17(3) of the Electoral Commission Act must submit to the chief electoral officer a copy of any amendments to its constitution within two months from the amendments being effected. 33 Paragraph 2(2) of the Regulations for the Registration of Political Parties. 34 Section 15(7) of the Electoral Commission Act. 35 The particulars which must be published in the Government Gazette are set out in paragraph 6 of the Regulations for the Registration of Political Parties, which amongst other things, includes the name of the party, date of registration of the party, and a reference number. 36 Section 15(5) of the Electoral Commission Act. The chief electoral officer maintains a register that records all registrations, renewals, cancellations, changes to party names, abbreviated names, distinguishing marks or symbols. 37 A political party can be registered under the Electoral Commission Act at different levels, each granting specific rights, namely, on – 38 • national level allowing the registered party to contest elections for the National Assembly, provincial legislatures, district metropolitan and local councils throughout South Africa; • provincial level allowing the registered party to contest elections for the provincial legislature, as well as district, metropolitan, and local councils within a that specific province; • metropolitan level allowing the registered party to contest elections in a particular metropolitan municipality; or • district level allowing the registered party to contest elections in a specific district municipality and all local municipalities within that district. A registered party is entitled to – 39 • representation on a party liaison committee; 40 • receive free access to any voters’ roll 41 compiled and maintained by the Commission; • have its name, abbreviation, and distinguishing mark or symbol protected by the Commission; and • contest an election. 42 If a registered party does not have representation in a legislative body, such as the National Assembly, a provincial legislature, or a municipal council, it must renew its registration each year before the end of January, provided it has not dissolved and continues to operate. 43 This renewal requires a written declaration from an executive officer of the party, which must be submitted to the chief electoral officer. 44 37 Paragraph 7(1) of the Regulations for the Registration of Political Parties. 38 Section 15(1) of the Electoral Commission Act. 39 Paragraph 8 of the Regulations for the Registration of Political Parties. 40 Party liaison committees under paragraph 6 of the Regulations on Party Liaison Committees will serve as vehicles for consultation and co-operation between the Commission and the registered parties concerned on all electoral matters, aimed at the delivery of free and fair elections. Paragraph 2 on the Regulations on Party Liaison Committees sets out the establishment and representation of party liaison committees in the national, provincial, or local sphere of government. 41 The term “voters’ roll” as defined in section 1 of the Electoral Act means the national common voters’ roll compiled under section 5 of that Act. 42 Section 26(a) of the Electoral Act. 43 Section 15(6) of the Electoral Commission Act. 44 Paragraph 10 of the Regulations for the Registration of Political Parties. The Commission has the authority to cancel a party’s registration under the following circumstances: 45 • If it determines that the party is no longer active. • If it believes the party does not intend to participate in any elections. • If the party notifies the Commission that it has dissolved or plans to dissolve on a certain date. 46 • If the party is not represented in the National Assembly, a provincial legislature, or a municipal council, and has not participated in any general election at the national, provincial, or municipal level since its registration or last representation. • If the party amends its deed of foundation or constitution to include prohibited provisions, such as promoting violence or hatred, or restricting membership based on grounds of race, ethnic origin, or colour. 47 If the Commission cancels a political party’s registration, the party will lose its exemption under section 10(1)(cE) and will be regarded as a normal taxpayer from that date. A political party will therefore be liable for tax on all its taxable income, namely, gross income less exempt income and allowable deductions, at the rate applicable to companies, 48 which is currently 27%. 49 7. Funding Political parties need financial resources to carry out their fundamental functions at all stages, namely, before, during, and after elections. This issued is addressed in My Vote Counts NPC v Minister of Justice and Correctional Services and another where the following was held: 50 “Although the State does provide some financial assistance to political parties for the activities which include campaigns, it appears to be a far cry from what is in fact needed to meet the demands of running a proper political machinery or electoral campaign. The inadequacy underscores the need for substantial monetary aid from private sector or individuals.” 45 Section 17(1) of the Electoral Commission Act. 46 The notification must be in the form of a declaration by the leader of the party. See paragraph 13 of the Regulations for the Registration of Political Parties. 47 The Commission must serve a notice on the party giving it an opportunity to withdraw or change the offending amendment. If no corrective steps are taken by the party within three months of the notice the Commission may cancel its registration. Section 17(1)(d) read with section 17(2) of the Electoral Commission Act. 48 Paragraph (d) of the definition of “company” in section 1(1). 49 The Minister of Finance under section 5(2)(a) may announce different tax rates in the national annual budget. The tax rates are published annually in the Rates and Monetary Amounts and Amendment of Revenue Laws Act. 50 2018 (5) SA 380 (CC) at 3. The framework for political finance includes the following two main components: 51 • Political party finance, which covers both cash and non-cash contributions, as well as expenses related to the everyday operations of political parties. This includes costs such as administration, salaries, office rentals, party member training, internal meetings, policy development, and outreaches to the public. • Campaign finance involving all forms of contributions and expenditure, cash or non-cash made by or for political parties and candidates 52 specifically for election purposes. This includes spending on campaign rallies, temporary office rentals, door-to-door canvassing, campaign communications and transportation, as well as the creation of party-branded materials and advertising across various media platforms. Political parties obtain financial support from a variety of sources (see 8) and may use these funds for several purposes, including organising campaign rallies, which can involve costs for transportation, promotional materials, pamphlets, food parcels, venues, and audio equipment, investing in media and advertising, such as election posters, billboards, and media coverage, distributing handouts, like branded t-shirts, caps, pens, and blankets, covering personnel expenses, paying for office rentals, managing administrative tasks and meetings, or handling legal costs. 53 7.1 Statutory regulatory framework of political funding 7.1.1 Political Funding Act To strengthen multi-party democracy, the Constitution mandates that national legislation must ensure political parties in national and provincial legislatures receive funding that is both fair and proportional. 54 The Political Funding Act fulfils this constitutional requirement and applies to all registered political parties (see 6). 55 Amongst its objectives, the Political Funding Act, establishes rules for public and private funding of political parties, 56 restricts certain types of donations, requires 51 Ndamase, S. (2020). Policy brief on party and campaign finance in South Africa’s 2019 elections at page 11. Electoral Institute for Sustainable Democracy in Africa. Available online at https://eisa.org/storage/2023/05/policy-brief-2019-party-campaign-finance-south-africa- elections-eisa.pdf [Accessed 13 January 2026]. 52 The term “candidate” as defined in section 1 of the Electoral Commission Act means any person whose name appears on a list of nominations by any registered party to become a member of the National Assembly or any provincial legislature under the Constitution and the Electoral Act. The term “candidate” as defined in section 1 of the Electoral Act means a South African citizen contesting an election, or a South African citizen nominated on a list of a party contesting an election, as the context requires. 53 Ndamase, S. (2020). Policy brief on party and campaign finance in South Africa’s 2019 elections at page 12. Electoral Institute for Sustainable Democracy in Africa. Available online at https://eisa.org/storage/2023/05/policy-brief-2019-party-campaign-finance-south-africa- elections-eisa.pdf [Accessed 13 January 2026]. 54 Section 236 of the Constitution provides that political parties represented in national and provincial legislatures must receive public funding, allocated on an equitable and proportional basis. 55 Section 14(1) of that Act. 56 The term “political party” as defined in section 1 of the Political Funding Act includes any entity that accepts donations principally to support or oppose any registered political party or its candidates, in an election as defined in section 1 of the Electoral Act. mandatory disclosure of private donations exceeding a set threshold, 57 and increases accountability of political parties to their constituents regarding financial matters. The Political Funding Act provides the following: • Donations to political parties can be made in cash or as in-kind contributions. 58 • Political parties may decline any donation or allocation from the Multi-Party Democracy Fund for any reasons. 59 • All donations exceeding a total of R200 000 60 in a financial year 61 must be disclosed 62 to the Commission by political parties. 63 • Private donors (individuals or entities) may contribute up to R30 million 64 per year per to any political party. 65 • Political parties are not allowed to accept donations from 66 foreign governments, foreign government agencies, any organ of state, state-owned enterprises, or criminal sources. 67 • Donations from foreign persons 68 or entities 69 are only permitted if they are intended for training, skills development, or policy development by a political party. 70 • Members of a political party may only accept donations on behalf of the party. 71 57 The thresholds referred to in section 8(2) and 9(1) of that Act are prescribed in Schedule 2, which sets outs the Regulations on Political Funding, 2017, in accordance with section 24 of that Act. 58 See the definitions of the term “donation” and “donation in kind” in section 1 of that Act. A donation, however, excludes a membership fee or any levy imposed by the party on its elected representatives as well as any funds from the National Assembly and provincial legislatures. 59 Section 8A of that Act. 60 See Proclamation Notice Regulation 275 Government Gazette 53182 of 18 August 2025. 61 The term “financial year” as defined in section 1 of the Political Funding Act means an accounting period of a year that ends on 31 March each year. 62 Section 9 of that Act. The Commission is required on a quarterly basis to publish the disclosed donations. 63 Section 9(1) of that Act. 64 See Proclamation Notice Regulation 275 Government Gazette 53182 of 18 August 2025. 65 Section 8(2) of the Political Funding Act. 66 Section 8 of that Act. 67 Section 8(3) of that Act. 68 The term “foreign person” is defined in section 1 of that Act. 68 Section 8(3) of that Act. 69 The limit on donations from foreign entities is R5 000 000 within a financial year. See section 8(5) read with paragraph 8 in Schedule 2 to the Political Funding Act. 70 Section 8(1)(4) of that Act. The limit on such donations is R5 000 000 within a financial year. See section 8(5) read with paragraph 8 in Schedule 2 to the Political Funding Act. 71 Section 10 of that Act. The Political Funding Act creates the following two Funds, 72 both managed by the Commission: 73 • The Political Representatives Fund, 74 which provides funding to represented political parties 75 mainly using money allocated from parliamentary appropriations. 76 • The Multi-Party Democracy Fund, 77 which provides funding to represented political parties from private sources, whether within or outside South Africa. 78 The Commission allocates money at prescribed intervals 79 from the Funds, using a specific formula 80 to represented political parties that must be used solely for activities that support the proper functioning of a political party within a modern democratic system. 81 A political party is required to deposit all donations, membership fees, and levies into a bank 82 account held in the political party’s name. Any funds allocated from the Funds must be placed in a separate account. 83 A political party is required to appoint an office-bearer or official to serve as its accounting officer. If the political party has representation in the National Assembly, or a provincial legislature, it must also appoint an auditor who is registered and practising under the Auditing Professions Act 84 to audit its financial records and statements. 85 7.1.2 Promotion of Access to Information Act The leader of a political party, or any person authorised by the leader, 86 is required by the PAIA to create and keep records for at least five years of all donations, above the threshold prescribed in the Political Funding Act, received principally to support or oppose any registered political party. These records must also include the identities of the donors and must be made available every quarter. 87 72 The term “Funds” is defined in section 1 of the Political Funding Act. 73 Section 5(1) of the Political Funding Act. 74 Section 2(1) of the Political Funding Act. 75 The term “represented political party” as defined in section 1 of the Political Funding Act means a political party with representation in the national or provincial legislatures. 76 Section 2(3)(a) of the Political Funding Act. 77 Section 3(1) of the Political Funding Act. 78 Section 3(3)(a) of the Political Funding Act. 79 Section 6(7) of the Political Funding Act. 80 Section 6 of the Political Funding Act. 81 Section 7 of the Political Funding Act deals with the usage of such money. 82 A bank registered under the Banks Act 94 of 1990. 83 Section 12(1)(a) and (b) of the Political Funding Act. 84 Act 26 of 2005. 85 Section 12(1)(c) and (d) of the Political Funding Act. 86 Section 52A(1) read together with the term ”head” defined in section 1 of the PAIA. 87 Section 52A of the PAIA. 8. Income tax exemption Section 10(1)(cE) provides an absolute exemption from income tax on all receipts and accruals of any registered political party. The following are non-exhaustive examples of receipts and accruals of a registered political party: • Membership fees and levies from elected representatives. • Funds provided by the National Assembly or provincial legislature for financial and administrative purposes. • Donations from the public or private individuals. • Bequests. • Allocations by the Commission from the Funds. • Donations from foreign persons or entities. • Investment income. • Income from sources like affiliated organisations, party-owned businesses or events such as gala dinners. The receipts or accruals envisaged are those that fall within the definition of “gross income”. 88 For any year of assessment, 89 gross income is the total worldwide income, whether in cash or another form, that a resident receives or to which it accrues. Generally, receipts or accruals of a capital nature, such as bona fide donations (see 9.1), are excluded from gross income, 90 unless specifically included by law. 91 If a receipt or accrual of a capital nature is not expressly included in the definition of “gross income”, it does not fall under the receipts and accruals envisaged in the opening words of section 10(1)(cE) and does not require exemption. Instead, such a receipt or accrual of a capital nature are considered when determining a taxable capital gain. 92 While a taxable capital gain may be subject to income tax, the exemptions in section 10 do not apply to it, since a taxable capital gain is included directly in taxable income, 93 and not as part of “income”, which is gross income less exempt income. 94 Paragraph 63 of the Eighth Schedule outlines when capital gains and losses for exempt persons can be disregarded (see 9.1). 88 The term “gross income” is defined in section 1(1). 89 The term “year of assessment” as defined in section 1(1) generally means any year or other period for which any tax or duty leviable under the Act is chargeable. 90 The term “donation” is defined in section 55(1) for purposes of donations tax and means any gratuitous disposal of property including any gratuitous waiver or renunciation of a right. 91 Paragraphs (a) to (n) of the definition of “gross income” in section 1(1). 92 The term “taxable capital gain” as defined in section 1(1) means an amount determined in accordance with paragraph 10 of the Eighth Schedule. 93 Paragraph (b) of the definition “taxable income” in section 1(1). 94 Section 26A. An amount, other than receipts and accruals of a capital nature, will constitute gross income if it is received by or accrued to a taxpayer 95 during any year or period of assessment. It was held in CIR v Genn & Co (Pty) Ltd96 that simply having physical control over money or money’s worth does not necessarily mean a receipt for gross income purposes. Although the Act does not define the words “received” or “accrued”, case law clarifies that an amount is “received” only if it is for the person’s own behalf and own benefit, 97 and it “accrues” when the person has an unconditional right to it. 98 An amount is included in gross income in the year of assessment it is either received or accrues, whichever happens first. 99 Non-monetary receipts or accruals can also be regarded as amounts for gross income, 100 unless they are capital in nature and not specifically included in the definition. In such cases, their value should be included in gross income in the year of assessment they are received or accrued. 9. Exemption from other taxes Registered political parties are not only exempt from income tax on their receipts and accruals but also benefit from exemptions from specific other taxes and duties, as considered below. 9.1 Capital gains tax CGT is the portion of income tax that applies to profits made from the disposal of assets, as determined under the Eighth Schedule. In certain cases, capital gains and losses may be disregarded. CGT is complex, and a full explanation of all its aspects extends beyond the scope of this Note. 101 If a registered political parties disposes of an asset, any capital gain or loss, must be disregarded, provided the amount constituting gross income of whatever nature would be exempt from income tax under section 10(1)(cE). 102 Since all receipts and accruals of qualifying registered political parties are exempt from income tax, these parties are not liable for CGT when they disposal of assets. 95 The term “taxpayer” as defined in section 1(1) means any person chargeable with any tax leviable under the Act. 96 20 SATC 113. 97 Geldenhuys v CIR 1974 (3) SA 256 (C), 14 SATC 419. 98 Lategan v CIR 1926 CPD 203, 2 SATC 16; Ochberg v CIR 1933 CPD, 6 SATC 1. 99 SIR v Silverglen Investments (Pty) Ltd 1969 (1) SA 365 (A), 30 SATC 199. 100 C SARS v Brummeria Renaissance (Pty) Ltd 2007 (6) SA 601 (SCA), 69 SATC 205. Also, see Interpretation Note 58 “The Brummeria Case and the Right to Use Loan Capital Interest Free”. 101 For commentary, see the Comprehensive Guide to Capital Gains Tax. 102 Paragraph 63 of the Eighth Schedule. 9.2 Donations tax Donations tax is payable 103 on the value of any property wheresoever situated disposed of by donation, whether directly or indirectly, and whether held in trust or not, by a resident 104 (the donor) to another person (the donee), 105 unless an exemption 106 applies. The rate is – 107 • 20% if the total value of property disposed of under a taxable donation since 1 March 2018 until the date of that donation does not exceed R30 million; 108 and • 25% for any value above R30 million. 109 A donation is any gratuitous disposal of property, whether cash or non-cash, and any gratuitous waiver or renunciation of a right, such as the waiver of a debt. 110 If property is disposed of for less than its market value, the difference may be treated as a donation if the Commissioner is satisfied that the consideration was inadequate. 111 The term ”property” 112 is broad and covers both movable and immovable property, corporeal (tangible) and incorporeal (intangible), legal rights, stocks, money, notes, patents, copyrights, and even animals. 113 Money is considered property because it serves as a medium of exchange or unit of account. The donor is responsible for paying donations tax, but if the tax is not paid within the prescribed period, both the donor and the donee are jointly liable. 114 Certain donations are exempt from donations tax. Specifically, donations made by or to any registered political party contemplated in section 10(1)(cE) are not subject to donations tax. 115 9.3 Skills development levy The SDL is a compulsory levy used to fund education and training, as set out in the SDL Act. SARS is responsible for collecting this levy. Employers who provide training to their employees may be eligible to receive grants from the relevant Sector Education and Training Authority (SETA). 116 103 Section 54. 104 The term “resident” is defined in section 1(1). 105 The term “donee” is defined in section 55(1). 106 Section 56. 107 Section 64. 108 Section 64(1)(a)(i). 109 Section 64(1)(a)(ii). 110 The term “donation” is defined in section 55(1). 111 Section 58(1). 112 Section 55(1). 113 van der Merwe, C. G. (31 January 2014). Things. In Law of South Africa (LAWSA) 27 (Second Edition Volume) in paragraph 50. My LexisNexis [online]. 114 Section 59. 115 Section 56(1)(h). 116 For commentary, see the External Guide – Guide for Employers in respect of Skills Development Levy and Interpretation Note 10 “Skills Development Levy Exemption: Public Benefit Organisations”. Every employer must under the SDL Act 117 pay an SDL equal to 1% of the leviable amount, 118 calculated on the total amount of remuneration paid or payable or deemed to be paid or payable by an employer 119 to its employees 120 during any month. This remuneration is calculated in the same way remuneration is calculated for employees’ tax, under the Fourth Schedule, with certain exclusions. 121 A registered political party is exempt from the payment of SDL if it is registered as an employer (see 10.2) and its total annual payroll will not exceed R500 000 in the next 12 months. 122 10. Compliance with other taxes and duties Despite registered political parties been exempt from income tax under section 10(1)(cE), they are still required to meet the obligations and conditions related to other applicable taxes and duties. An overview of the most common taxes and duties that may apply is considered below. 10.1 Dividends tax The provisions for dividends tax are contained in sections 64D to 64N and apply to all dividends paid by companies, except for headquarter companies. While dividends tax is part of the Income Tax Act, it is treated as a separate tax from income tax. 123 Dividends tax is levied at the rate of 20% 124 on dividends paid by resident companies. 125 It also applies to certain foreign dividends, specifically when the dividend is not a distribution of an asset in specie and is paid by a foreign company on a listed share. 126 The person who benefits from the dividend, referred to as the beneficial owner, 127 is responsible for the dividends tax on cash dividends. When a company declares and pays a dividend, it must withhold the dividends tax amount, unless the dividend consists of a distribution of an asset in specie, in which case the company itself may be liable for dividends tax if no exemption applies. 117 Section 3(1) of that Act. 118 Section 3(3) of the SDL Act. 119 The term “employer” is defined in section 1(1) of the SDL Act and includes an “employer” as defined in the Fourth Schedule. 120 The term “employee” is defined in section 1(1) of the SDL Act and includes an “employee” as defined in the Fourth Schedule. 121 See section 3(4) of the SDL Act for the exclusions. 122 Section 4(b) of the SDL Act. 123 For commentary, see the Comprehensive Guide to Dividends Tax. 124 Section 64E(1). 125 A reduced or zero rate may apply under specific circumstances. 126 The term “listed share” as defined in section 1(1) means a share that is listed on an exchange as defined in section 1 of the Financial Markets Act 19 of 2012 and licensed under section 9 of that Act. A listed share could therefore include a share in a foreign company whose shares are listed on a South African exchange. 127 The term “beneficial owner” is defined in section 64D. Exemptions from dividends tax on cash dividends are contained in section 64F, and exemptions for dividends in specie are contained in section 64FA(1). It is not the responsibility of the company or regulated intermediary 128 paying the dividend to determine who the beneficial owner of a dividend is and whether that person qualifies for an exemption from dividends tax. A registered political party can hold shares in a company and receive dividends from those shares. However, a registered political party that is a beneficial owner of the dividends, is not exempt from paying dividends tax. 10.2 Employees’ tax Employees’ tax, commonly known as Pay-As-You-Earn or PAYE, is dealt with in the Fourth Schedule. 129 Its purpose is to ensure that an employee’s income tax liability is settled while remuneration is earned, preventing a large tax bill on assessment. Employees’ tax deducted serves as an income tax credit that is set off against the income tax liability 130 of an employee, calculated on an annual basis, to determine the employees’ final income tax liability for a year of assessment. Every employer, whether resident in South Africa, a non-resident conducting business through a permanent establishment in the country, or a representative employer, who pays or becomes liable to pay an amount of remuneration 131 to any person must deduct and withhold employees’ tax. 132 The amount of PAYE to be deducted or withheld is calculated using the tax deduction tables issued by the Commissioner. Each month, the employer must submit a monthly return, the EMP 201 form, and pay the employees’ tax within seven days after the month in which the deduction was made. Additionally, employers must issue employees with an employees’ tax certificate, IRP 5, if PAYE was deducted or withheld from the employee’s remuneration, 133 which discloses the total remuneration earned during a year of assessment, the employees’ tax, and unemployment insurance fund contributions (see 10.5) deducted. Registered political parties are not exempted from this requirement. If any employees of a registered political party are liable for income tax, the party must register for PAYE within 21 business days 134 of becoming an employer, 135 using the application form EMP 101e. 136 If already registered for another tax type on eFiling, the party can register for PAYE as part of the single registration process. 137 128 The term “regulated intermediary” is defined in section 64D. A regulated intermediary is generally an entity that temporarily holds a dividend paid by a company before it is paid over to the ultimate beneficial owner. 129 For commentary, see the External Guide – Guide for Employers in respect of Employees’ Tax. 130 Paragraph 28 of the Fourth Schedule. 131 The term “remuneration” is defined in paragraph 1 of the Fourth Schedule. 132 Paragraph 2(1) of the Fourth Schedule. 133 Paragraph 14 of the Fourth Schedule. 134 See section 244 of the TA Act for a discussion on deadlines. 135 Paragraph 15(1) of the Fourth Schedule read with Chapter 3 of the TA Act. 136 For commentary, see the External Guide – Guide for Completion of Employer Registration Application. 137 For commentary, see the External Guide – How to Complete the Registration, Amendments and Verification Form (RAV01). 10.3 Securities transfer tax The STT Act requires that STT of 0,25% 138 be levied on the taxable amount 139 of every security 140 transferred, 141 by a close corporation, 142 a company 143 incorporated in South Africa, or a foreign company listed on an exchange. 144 The administrative provisions dealing with the payment of STT are contained in the Securities Transfer Tax Administration Act. 145 All STT payments must be made electronically using the SARS e-STT system. 146 While section 8(1) of the STT Act contains certain exemptions, registered political parties are not exempt. As a result, STT must be paid when a security is transferred to a registered political party. 10.4 Transfer duty Transfer duty is levied under the Transfer Duty Act 147 on a sliding scale on the value of any property 148 acquired by any person. This duty will apply only if the property transaction does not qualify as a taxable supply for VAT purposes. 149 The applicable rates range from 0% to 13% for all persons. 150 Typically, the responsibility for paying the transfer duty falls on the person acquiring the property (the transferee). Registered political parties are required to pay transfer duty when they acquire property, as they do not qualify for an exemption from the payment of transfer duty. 138 Section 2(1) of the STT Act 139 Sections 3(1), 4, 5 and 6 of the STT Act determine the relevant taxable amount. 140 The term “security” as defined in section 1 of the STT Act means any share or depository receipt in a company, or any member’s interest in a close corporation. 141 The term “transfer” is defined in section 1 of the STT Act and save for certain exclusions, includes the transfer, sale, assignment or cession or disposal in any other manner of a security or the cancellation or redemption of that security. 142 The term “close corporation” as defined in section 1 of the STT Act means a “corporation” as defined in section 1 of the Close Corporation Act 69 of 1984. 143 The term “company” as defined in section 1 of the STT Act means any corporation, or company incorporated, established, or formed by or under any law. 144 For commentary on STT and the electronic submission of STT declarations and payments on the e-STT system via eFiling, see Taxation in South Africa and the External Reference Guide – Securities Transfer Tax. 145 Act 26 of 2007. 146 Sections 3(2) and 5 of the STT Administration Act. 147 Act 40 of 1949. 148 See definition of “property” in section 1(1) of the Transfer Duty Act. 149 For commentary on transfer duty in general and the processing of transactions on eFiling, see the External Guide – Guide for Transfer Duty via eFiling and the Transfer Duty Guide. 150 Section 2(1)(b) of the Transfer Duty Act. 10.5 Unemployment insurance fund contributions The UIF provides temporary financial support to workers who become unemployed or are unable to work because of maternity or adoption leave or illness, or in the event of death, to the dependants of a deceased contributor. 151 The unemployment insurance system in South Africa is regulated by the Unemployment Insurance Act 152 and the Unemployment Insurance Contributions Act (UIC), 153 which outline the benefits available to contributors and the imposition and collecting of UIF contributions. Employers are required to pay UIF contributions amounting to 2% of the remuneration paid or payable to employees each month, subject to specified exclusions, with 1% contributed by the employee and 1% contributed by the employer. Contributions are not required on any portion of an employee’s monthly remuneration paid or payable by an employer that exceeds R17 712 or R212 544 annually. 154 Registered political parties that pay remuneration to employees are generally required to make UIF contributions unless they qualify for certain exemptions. The UIF contributions must be paid to the UIF office of the Department of Employment and Labour 155 or to SARS within seven days after the end of the month in which the deduction was made. Payment options include eFiling, electronic funds transfer (EFT) or visiting a branch of an approved banking institution. 156 10.6 Value-added tax VAT is an indirect tax levied under the VAT Act. In South Africa, the standard VAT rate is 15% and applies to most supplies and services, including imports. Some goods and services are subject to VAT at the zero rate when supplied in South Africa and on exports to other countries. Certain goods are also exempt when supplied in or imported into South Africa. VAT is payable only on imported services that are acquired for non- taxable purposes. VAT is levied on an inclusive basis, which means that any prices marked on products in stores, and any prices advertised or quoted, must include VAT if the supplier is a vendor. Supplies that attract VAT at either the standard or zero rate are called “taxable supplies”. Any person that makes taxable supplies above the compulsory registration threshold or has been allowed to register voluntarily for VAT is referred to as a “vendor”. A vendor includes a person that is liable to register for VAT, even if that person has not actually registered. 151 Section 2 of the Unemployment Insurance Act. 152 Act 63 of 2001. 153 Act 4 of 2002. 154 Section 6(2) of the UIC Act, read with Government Notice 475 in Government Gazette 44641 of 28 May 2021 effective from 1 June 2021. 155 Information is available from the Department of Labour’s website at www.labour.gov.za. 156 For commentary, see the Guide for Employers in respect of the Unemployment Insurance Fund. If a registered political party falls within the definition of an “association not for gain” as defined in the VAT Act 157 and complies with the requirements for compulsory or voluntary registration such a registered political party will be treated like any other business making taxable supplies and will be liable to register and account for VAT according to the normal VAT rules applying to all vendors. There, however, are a few special provisions applying to associations not for gain. 158 For specific VAT-related issues, a ruling application can be submitted by e-mail to [email protected]. 159 11. Section 18A tax-deductible receipts Section 18A allows taxpayers to deduct bona fide donations, but only if those donations are actually paid or transferred during a year of assessment to organisations approved by the Commissioner for purposes of section 18A. If an organisation is not approved under section 18A, even if it is exempt from income tax under any other section of the Act, it cannot issue section 18A receipts for donations it receives. Political parties do not qualify for section 18A approval. 160 As a result, donations made to registered political parties are not tax-deductible under section 18A(1), and these parties are not permitted to issue section 18A receipts 161 to donor taxpayers. Donor taxpayers who receive such invalid section 18A receipts cannot use them to claim a deduction under section 18A(1) in determining their taxable income. 12. Reporting requirements 12.1 Income tax returns Each year, the Commissioner publishes a public notice in the Government Gazette 162 listing the persons who must submit an income tax return. 163 This includes every company and trust that is resident during that particular year of assessment, subject to certain conditions outlined the public notice. 157 Section 1(1) of the VAT Act. 158 For commentary on VAT and “associations not for gain”, see the VAT 414 – Guide for Associations not for Gain and Welfare Organisations. 159 For commentary, see the VAT Ruling Process Quick Reference Guide. 160 For commentary, see the Basic Guide to Section 18A Approval, the Tax Exemption Guide for Public Benefit Organisations in South Africa, the Tax Exemption Guide for Institutions, Boards or Bodies, and the Guide to Section 18A Approval for a Department in the National, Provincial and Local Sphere of Government. 161 A section 18A receipt is a receipt with mandatory information issued by an organisation approved by the Commissioner for purposes of section 18A potentially entitling the donor taxpayer to an income tax deduction for bona fide donations actually paid or transferred during a year of assessment to that section 18A-approved organisation. 162 For the public notice relating to the 2025 year of assessment, see Government Notice 6217 in Government Gazette 52712 of 23 May 2025. 163 Section 25 of the TA Act read with section 66(1). The term “company” as defined includes any association 164 formed in South Africa to serve a specified purpose, beneficial to the public or a section of the public. 165 Registered political parties established and governed by a constitution fall under this definition and are required to submit income tax returns. When a political party registers for income tax, it is allocated a taxpayer reference number, 166 which must be included when filing returns and any document submitted to SARS. Income tax returns must be submitted annually, even if the registered political party’s exemption means there is no tax liability. Income tax returns can be obtained from eFiling, at any SARS Service Centre, or from the SARS National Service Centre. The return must be a full and true return, 167 and signed by authorised representative (see 13.4) of the political party. The person signing the return is considered to be aware of the statements made in the return. 168 Not receiving an income tax return does not remove the obligation to submit one. 169 A person who wilfully and without cause refuses or neglects to submit a return or document to SARS is guilty of an offence and can be fined or imprisoned for up to two years if convicted. 170 The annual public notice issued by the Commissioner also sets out the deadline for submitting income tax returns for the relevant year of assessment specified in that notice. These returns can be submitted either manually or electronically via eFiling. Political parties are not required to include supporting documents when submitting their income tax returns, however, if any supporting documentation is needed to verify information in the return, the party will be notified accordingly. 164 LAWSA describes an association as founded on a basis of mutual agreement, it therefore will come into being, if the individuals who propose forming it have the serious intention to associate and agree on the essential characteristics and objectives of the universitas or unincorporated association, which is usually manifested by the approval and adoption of a constitution. See Pienaar, G. P. (28 February 2015). Association. In Law of South Africa (LAWSA) 2 (Third Edition Volume) in paragraph 155. My LexisNexis [online]. 165 Paragraph (d) of the definition of “company” in section 1(1). 166 The term “taxpayer reference number” is defined in section 1 of the TA Act and means the reference number referred to in section 24 of the same Act. 167 Section 25(2) of the TA Act. 168 Section 25(3) of the TA Act. 169 Section 25(4) of the TA Act. 170 Section 234(2)(d) of the TA Act. 13. Administrative provisions SARS is responsible for the administration of the TA Act under the control and direction of the Commissioner. 171 To fulfil this role, the Commissioner is empowered to obtain any information that could impact a person’s tax liability for any tax period 172 or event, 173 or that relates to the person’s obligation either personally or on behalf of another person, to comply with a tax Act. 174 Additionally, the Commissioner may also perform any other administrative duties necessary to implement the provisions of the tax Act. 175 13.1 Furnishing of information SARS, in administering the TA Act, may require a taxpayer to provide any relevant information or material, either verbally or in writing, that SARS requires. 176 If someone other than the taxpayer is asked, the request is limited to records or documents that person should reasonably have regarding the taxpayer. 177 The Commissioner is also empowered to request any person deemed able to furnish information about a registered political party to – • answer any questions; • provide access to books of account, records, or other documents for inspection; or • meet with a SARS representative to present documents for examination. A person who wilfully and without just cause refuses or neglects to furnish, produce or make available any document or thing, or reply to or answer truly and fully any questions requested by SARS is guilty of an offence and can fined or imprisoned for up to two years if conviction. 178 13.2 Changes in registered particulars A registered political party is required to notify SARS whenever there are changes to its registered details, such as postal, physical, or electronic addresses, the representative taxpayer (see 13.4), or banking information, to keep SARS records up to date. 179 The registered political party must also inform SARS of the name of its public officer and the address for the delivery of notices or documents, 180 as well as report any changes to the public officer or the service address within 21 business days of the change. 181 171 Section 3(1) of the TA Act. 172 Section 3(2)(a)(i) of the TA Act. 173 Section 3(2)(a)(ii) of the TA Act. The term “tax event” as defined in section 1 of the TA Act means an occurrence, which affects or may affect the liability of a person to tax. 174 Section 3(2)(a)(iii) of the TA Act. 175 Section 3(2)(h) of the TA Act. 176 Section 46(1) of the TA Act. 177 Section 46(3) of the TA Act. 178 Section 234(2)(h) of the TA Act. 179 Section 23 of the TA Act. 180 Section 249(1) of the TA Act. 181 Section 249(2)(b) of the TA Act. A person who wilfully and without just cause refuses or neglects to notify SARS of a change in registered particulars is guilty of an offence and can be fined or imprisoned for up to two years if convicted. 182 13.3 Record-keeping Registered political parties must keep their records for five years. 183 The records, books of account, or documents that must be kept and retained can include any written, audio, or visual, or other types of information, whether in paper or electronic form. In certain situations, records must be kept for longer. 184 For example, when there is an ongoing SARS audit or investigation the relevant records, books of account, or documents must be kept until the audit or investigation is concluded, or the five-year period has passed, whichever is later. 185 To ensure records are secure and easily accessible for SARS inspections or audits, registered political parties must keep and retain them in their original form, organised, and in a safe location. 186 When records are kept electronically, 187 they must comply with the Electronic Record- Keeping Rules, 188 which require that electronic records remain in their original form 189 and be accessible and readable by SARS within a reasonable time. The rules also cover where records are stored, maintaining system documentation, and procedures for storage, backups, and conversions. 190 A person who wilfully and without just cause fails or neglects to retain records is guilty of an offence and can be fined or imprisoned for up to two years if convicted. 191 13.4 Representative taxpayer A registered political party, typically formed as an association of persons and governed by a constitution, acts through a representative who is responsible for ensuring the party’s tax compliance and managing its tax obligations. This representative taxpayer 192 must be a natural person residing in South Africa and may include a person who manages and controls the party’s income in a fiduciary 193 capacity. 182 Section 234(2)(a) of the TA Act. 183 Section 29(3) of the TA Act. 184 Section 32 of the TA Act. 185 Section 32(a) of the TA Act. 186 Section 30 of the TA Act. 187 Section 255 of the TA Act. 188 See Government Notice 787 in Government Gazette 35733 of 1 October 2012. 189 A document will under section 14 of the Electronic Communications and Transactions Act 25 of 2002 be regarded as being in original form if the integrity of the data is maintained, for example, when it is complete and unaltered. 190 For commentary, see the Electronic Communications Guide. 191 Section 234(2)(e) of the TA Act. 192 The term “representative taxpayer” is defined in section 1(1). 193 The word “fiduciary” means a person who holds a position of trust or responsibility including decision-making powers over the affairs of a registered political party. A representative taxpayer, under the TA Act, is a person who acts as an agent to pay another person’s tax liability and includes a person who is a representative taxpayer under the Act. 194 Every person who becomes or ceases to be a representative taxpayer under the Act, except a company’s public officer, must notify SARS within 21 business days, using the form prescribed by the Commissioner. 195 Any person who wilfully and without just cause refuses or neglects to appoint a representative taxpayer, notify SARS of the appointment, or change of a representative taxpayer is guilty of an offence and can be fined or imprisoned for up to two years if convicted. 196 A representative taxpayer is personally liable for any tax that should have been paid to SARS in that capacity, or for any amount that was disposed of instead of being paid. 197 Any assessment issued to a representative taxpayer for any tax is made only in that capacity. 198 A taxpayer 199 remains responsible for all tax obligations under a tax Act when the representative taxpayer fails to fulfil the required responsibilities or duties. 200 For a registered political party, the representative taxpayer can be any officer-bearer or official, such as the treasurer or accounting officer, who is appointed to manage the party’s financial affairs. For tax purposes, a registered political party is considered as a company (see 12.1). Therefore, the same rules and requirements that apply to a company’s public officer also apply to the party’s representative taxpayer. Every company carrying on business or with an office in South Africa must always have an individual that is a resident as its representative. 201 This person 202 should be a senior official or, if none are available, another suitable person approved by SARS. 203 The representative is appointed by the company or by an authorised agent or legal practitioner 204 and is known as the public officer, who is responsible for tax-related matters under a tax Act, and may face penalties for any company defaults. 205 194 The term “representative taxpayer” is defined in section 1 of the TA Act and assigned meaning in section 153(1) of that Act. 195 Section 153(2) of the TA Act. 196 Section 234(2)(b) of the TA Act. 197 Section 155 of the TA Act. 198 Section 154(2) of the TA Act. 199 The term “taxpayer” is defined in section 1(1). 200 Section 153(3) of the TA Act. 201 Section 246(1) of the TA Act. 202 Section 246(2) of the TA Act. 203 Section 246(2)(a) of the TA Act. 204 The term “legal practitioner” as defined in section 1 of the TA Act, which was inserted by section 14 of the Tax Administration Laws Amendment Act 43 of 2024 and came into operation on 24 December 2024, the promulgation of that Act, means a legal practitioner as defined in section 1 of the Legal Practice Act 28 of 2014. The term “legal practitioner” as defined in the Legal Practice Act means an advocate or attorney admitted and enrolled under sections 24 and 30 of that Act, respectively. 205 Section 246(5) of the TA Act. A person cannot be appointed as a public officer if disqualified 206 under the Trust Property Control Act, 207 the NPO Act, 208 or the Companies Act. 209 The use of the disjunctive word “or” means that a person will be disqualified from being appointed as a public officer if that person has been disqualified under either one or a combination of those Acts. The grounds for disqualification of a person authorised 210 as a trustee under the Trust Property Control Act, the grounds of disqualification of a person from being appointed or elected as an officer-bearer 211 under the NPO Act, as well as the grounds of disqualification of a person as a director 212 of a company under the Companies Act are similar and therefore summarised below. A person will be disqualified if that person – • is an unrehabilitated 213 insolvent; 214 • has been prohibited by a court to be a director of a company, or declared by a court to be delinquent 215 under the Companies Act or the Close Corporations Act; 216 • is prohibited under any law or any public regulation to be a director of a company; 217 • has been removed from an office of trust, on the grounds of misconduct involving dishonesty; 218 206 Section 246(8) of the TA Act which was inserted by section 30 of Tax Administration Laws Amendment Act 18 of 2023 and came into operation on 22 December 2023, the date of promulgation of that Act. 207 Section 6 of that Act. 208 Section 25A of that Act. 209 Section 69 of that Act. A trustee is a person appointed under a trust instrument and who may act in that capacity only if authorised to do so in writing by the Master of the High Court under section 6 of the Trust Property Control Act. 211 Generally, any person elected to office, such as the chairperson, vice-chairperson, treasurer, secretary, or any person appointed to the management or executive committee who may act in a fiduciary capacity. 212 Any person appointed under section 66(2)(b) of the Companies Act, as a director or alternative director. 213 Section 69(11) of the Companies Act empowers the court to exempt a person from the grounds of disqualification set out in section 69(8)(b) of that Act. 214 Section 6(1A)(a) of the Trust Property Control Act, section 25A(1)(a) of the NPO Act and section 69(8)(b)(i) of the Companies Act. 215 A declaration of delinquency may be made under section 162 of the Companies Act or under section 47 of the Close Corporations Act 69 of 1984. 216 Section 6(1A)(b) of the Trust Property Control Act, section 25A(1)(b) of the NPO Act and section 69(8)(a) of the Companies Act. 217 Section 6(1A)(c) of the Trust Property Control Act, section 25A(1)(c) of the NPO Act and section 69(8)(b)(ii) of the Companies Act. 218 Section 6(1A)(d) of the Trust Property Control Act, section 25A(1)(d) of the NPO Act and section 69(8)(b)(iii) of the Companies Act. • has been convicted, in South Africa or elsewhere, and imprisoned without the option of a fine, or fined more than the prescribed amount under the Companies Act 219 for theft, fraud, forgery, perjury or an offence – 220  involving fraud, misrepresentation or dishonesty, or money laundering, terrorist financing or proliferation financing activities; 221  in connection with the promotion, formation, or management of a company, 222 or in connection with consenting to act or acting as a director when ineligible or disqualified; 223 or  under the Trust Property Control Act, the NPO Act, the Companies Act, the Insolvency Act, 224 the Close Corporations Act, the Competition Act, 225 the Financial Intelligence Centre Act, 226 the Financial Markets Act, 227 the Prevention and Combating of Corrupt Activities Act, 228 the Protection of Constitutional Democracy Against Terrorist and Related Activities Act, 229 or the TA Act; 230 • is subject to a resolution adopted 231 by the Security Council of the United Nations; 232 or • is an unemancipated minor or is under a similar legal disability. 233 Public registers are kept by the – • Master of the High Court recording persons who have been disqualified from serving as trustees, when a court order under the Trust Property Control Act or another law is issued; 234 219 Section 69 of the Companies Act. 220 Section 6(1A)(e) of the Trust Property Control Act, section 25A(1)(e) of the NPO Act and section 69(8)(b)(iv) of the Companies Act. 221 Section 6(1A)(e)(i) of the Trust Property Control Act, section 25A(1)(e)(i) of the NPO Act and section 69(8)(b)(iv)(aa) of the Companies Act. See section 1 of the Financial Intelligence Centre Act 38 of 2001 for definition of those terms. 222 Section 69(2) or (5) of the Companies Act. 223 Section 6(1A)(e)(ii) of the Trust Property Control Act, section 25A(1)(e)(ii) of the NPO Act and section 69(8)(b)(iv)(bb) of the Companies Act. 224 Act 24 of 1936. 225 Act 89 of 1998. 226 Act 38 of 2001. 227 Act 19 of 2012. 228 Act 12 of 2004. 229 Act 33 of 2004. 230 Section 6(1A)(e)(iii) of the Trust Property Control Act, section 25A(1)(e)(iii) of the NPO Act and section 69(8)(b)(iv)(cc) of the Companies Act. 231 Chapter VII of the Charter of the United Nations, which provides for financial sanctions entailing the identification of persons or entities against whom member states of the United Nations must act specified in the resolution. 232 Section 6(1A)(f) of the Trust Property Control Act, section 25A(1)(f) of the NPO Act and section 69(8)(v) of the Companies Act. 233 Section 6(1A)(g) of the Trust Property Control Act, section 25A(1)(g) of the NPO Act and section 69(7)(b) of the Companies Act. 234 Section 6(1H) of the Trust Property Control Act. • Nonprofit Organisations Directorate recording persons who have been disqualified from serving as office-bearers, when a court order under the NPO Act or another law is issued; 235 and • Companies and Intellectual Property Commission recording persons who have been disqualified from serving as directors, or on probation, issued by a court order under the Companies Act or another law. 236 If a company’s public officer is not eligible for appointment either because the requirements are not met or SARS has notified the company that the person unsuitable the company must notify SARS in writing of a new appointment within 21 business days. 237 If a public officer is not appointed as required, the public officer will automatically be assigned to the first eligible person in the following order of priority, namely, the – 238 • managing director or equivalent; • financial director or equivalent; • company secretary; 239 • director 240 or prescribed officer 241 with the largest shareholding; • director or prescribed officer with the longest tenure; and • senior employee according to the company’s reporting hierarchy. If none of the eligible persons can be appointed as the public officer, SARS has the authority to designate any suitable person for that purpose. 242 If a company is placed under business rescue in accordance with the Companies Act, the business rescue practitioner becomes the representative taxpayer. 243 Should the company go into voluntary or compulsory liquidation, the appointed liquidator or liquidators assume all duties and responsibilities of the public officer for the duration of the liquidation. 244 235 Section 25A(9)(a) of the NPO Act. 236 Section 69(13) of the Companies Act. 237 Section 246(7) of the TA Act 238 Section 246(3) of the TA Act, which was amended by section 31(b) of the Tax Administration Laws Amendment Act 43 of 2024 and came into operation on 24 December 2024, the date of promulgation of that Act. 239 The duties of a company secretary are set out in section 88 of the Companies Act. 240 A “director” as defined in section 1 of the Companies Act refers to anyone who serves on a company’s board as described in section 66, including alternate directors and any person occupying the position of a director or alternate director, regardless of their official title. An “alternate director” is a person elected or appointed to temporarily serve as a board member in place of a specific director. 241 The term “prescribed officer” as defined in section 1 of the Companies Act means a person who, within a company, performs any function that has been designated by the Minister, the member of the Cabinet responsible for companies, under section 66 (10) of that Act. 242 Section 246(3)(b) of the TA Act. 243 Paragraph (a) of the definition of “representative taxpayer” in section 1(1) and section 248(2) of the TA Act. 244 Section 248(1) of the TA Act. A company is required to always have a public officer and must maintain an address for the service or delivery of notices. 245 Any changes to the public officer or the address for service or delivery of notices must be reported to SARS within 21 business days of the change. 246 13.5 Objection and appeal If a registered political party disagrees with an assessment, 247 it may first request SARS to provide the reasons for the assessment before submitting an objection. 248 The request must be made in the prescribed form and manner and submitted to SARS within 30 days 249 from the date of the assessment. A political party can object to an assessment 250 in accordance with Chapter 9 of the TA Act read with the “rules” 251 published in the Government Gazette. The objection must be lodged within 80 252 business days 253 after – 254 • receiving the notice with the requested reasons for the assessment, if applicable; 255 • receiving a notice issued by SARS confirming that the reasons requested have been provided; 256 or • the date of the assessment. The objection must be submitted on the prescribed form and must clearly set out and include – 257 • the specific part or amount of the assessment being disputed; • the grounds of the assessment 258 being disputed; and • supporting documents to substantiate the grounds of objection not previously provided to SARS for the disputed assessment. 245 Section 249(2)(a) of the TA Act. 246 Section 249(2)(b) of the TA Act. 247 The term “assessment” as defined in Rule 1 includes, for purposes of the rules, a decision referred to in section 104(2) of the TA Act. 248 Rule 6 deals with reasons for an assessment. 249 The term “day” in Rule 1 means a “business day” as defined in section 1 of the TA Act. 250 For commentary, see Interpretation Note 15 “Exercise of Discretion in case of Late Objection or Appeal”. 251 The rules for objections and appeals are formulated under section 103 of the TA Act and published in Government Regulation Notice 3146 in Government Gazette 48188 of 10 March 2023. For further commentary, see the Dispute Resolution Guide: Guide on the Rules Promulgated in terms of Section 103 of the Tax Administration Act, 2011 and the Alternative Dispute Resolution: Quick Guide. 252 Rule 7(1) was amended from 30 to 80 days, effective from 10 March 2023. 253 The term “business day” is defined in section 1 of the TA Act. 254 Rule 7 deals with objections. 255 Rule 7(1)(a) read with Rule 6. 256 Rule 7(1)(a) read with Rule 6(4). 257 Rule 7(2). 258 The term “grounds of assessment” as defined in Rule 1, for purposes of the rules includes any grounds for a decision referred to in section 104(2) of the TA Act, and reasons for assessment provided by SARS contemplated in Rule 6(5). SARS will consider the objection and may either disallow it or allow it completely or in part. If the objection is disallowed and the party is not satisfied with the outcome, it may submit to SARS a written appeal against the disallowance of the objection within the prescribed period. 259 14. Conclusion Section 10(1)(cE) provides an automatic exemption from income tax for all receipts and accruals of any political party registered under the Electoral Commission Act, no application or approval from the Commissioner is required. Registered political parties are not allowed to issue section 18A receipts to donor taxpayers for any donations received. All reporting and administrative requirements under the Act and TA Act must be met. It is the responsibility of the political party to prove 260 its registration under the Electoral Commission Act and compliance with the relevant requirements for purposes of the income tax exemption considered in this Note. The registered political party must keep sufficient evidence to support its status and the view taken 261 and if SARS requests it, this proof must be provided in an acceptable form. Leveraged Legal Products SOUTH AFRICAN REVENUE SERVICE 259 Rule 10. 260 Section 102 of the TA Act. 261 Section 29 of the TA Act.

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