SARS Interpretation Note 144: Income tax exemption: Bargaining councils (source: https://www.sars.gov.za/legal-intr-in-144-income-tax-exemption-bargaining-councils/)
INTERPRETATION NOTE 144
DATE: 28 May 2026
ACT : INCOME TAX ACT 58 OF 1962
SECTION : SECTION 10(1)(cA)(i)
SUBJECT : INCOME TAX EXEMPTION: BARGAINING COUNCILS
Contents
Preamble .............................................................................................................................. 2
1. Purpose ..................................................................................................................... 3
2. Background ............................................................................................................... 3
3. Bargaining councils ................................................................................................... 3
4. The law...................................................................................................................... 6
5. Application of the law................................................................................................. 6
6. Approval requirements .............................................................................................. 7
6.1 Meaning of institution, board, or body ........................................................................ 7
6.2 Established under any law ......................................................................................... 7
6.3 Sole or principal object .............................................................................................. 9
7. Prescribed activities................................................................................................. 10
7.1 Necessary and useful services provided to the State, and the general public .......... 10
7.2 Activities to promote industry ................................................................................... 11
8. Prescribed requirements to be met for approval by Commissioner .......................... 13
8.1 Prohibition on distributions....................................................................................... 14
8.2 Use of funds ............................................................................................................ 15
8.3 Dissolution ............................................................................................................... 16
9. Approval conditions imposed by the Commissioner ................................................. 18
10. Withdrawal of the approval and exemption .............................................................. 19
11. Exemption from income tax ..................................................................................... 19
12. Section 18A tax-deductible receipts......................................................................... 20
13. Conclusion .............................................................................................................. 21
Preamble
In this Note unless the context indicates otherwise –
• “approved bargaining council” means a registered bargaining council
approved by the Commissioner as an institution, board, or body;
• “Commission” means the Commission for Conciliation, Mediation and
Arbitration as defined and established under the LRA to resolve any labour
disputes through conciliation; 1
• “Constitution” means the Constitution of the Republic of South Africa, 1996;
• “court” means the Labour Court established under the LRA; 2
• “Income Tax Act” means the Income Tax Act 58 of 1962;
• “institution, board, or body” means an institution, board, or body approved
by the Commissioner under section 10(1)(cA)(i);
• “LRA” means the Labour Relations Act 66 of 1995;
• “NEDLAC” means the National Economic Development and Labour Council 3
established 4 by the National Economic, Development and Labour Council
Act 35 of 1994 to, amongst other things, promote the goals of economic growth,
participation in economic decision-making and social equity;
• “parties” means the registered trade unions and registered employers’
organisations that either establish a bargaining council or are admitted to it after
establishment;
• “prescribed activities” mean the activities prescribed in section 10(1)(cA)(i)
an institution, board, or body must undertake in the furtherance of its sole or
principal object;
• “prescribed requirements” mean the formal conditions and requirements set
out in section 10(1)(cA)(i) to qualify for approval as an institution, board, or
body;
• “registered bargaining council” means a bargaining council registered by
the registrar under section 29(15) of the LRA;
• “registrar” means the registrar of labour relations; 5
• “section” means a section of the Income Tax Act; and
• any other word or expression bears the meaning ascribed to it in the Income
Tax Act.
The guides referred to in this Note are available on the SARS website at
should be consulted.
1 Sections 112 and 213 of the LRA.
2 Section 151 of that Act.
3 Defined in section 213 of the LRA.
4 Section 2 of that Act.
5 Appointed under section 108 of the LRA.
1. Purpose
This Note provides clarity on the approval of registered bargaining councils as
institutions, boards, or bodies under section 10(1)(cA)(i).
2. Background
The Constitution guarantees fair labour practices for all. 6 It grants workers 7 the right to
form trade unions, 8 and employers 9 the right to form employers’ organisations. 10
Both trade unions and employers’ organisations are entitled to manage their own
affairs, organise themselves, and form or join federations. 11 Every trade union,
employers’ organisation and employer has the right to engage in collective bargaining.
The Constitution further provides that national legislation be enacted to regulate
collective bargaining. 12 The LRA was enacted to give effect to these constitutional
labour rights, providing for all trade unions, employers’ organisations and employers
to engage in collective bargaining to promote economic development, social justice
and labour peace. 13 LAWSA provides the following on the LRA: 14
“One of the primary objects of the Labour Relations Act is to provide a framework for orderly
collective bargaining at sectoral level. Bargaining councils are central to this statutory
imperative and provide a regulated structure designed to enable employers’ organisations
and trade unions to collectively bargain to determine wages, terms and conditions of
employment and other matters of mutual interest in a specific sector and area.”
(Footnotes omitted)
Because of their significant role in supporting the economy, registered bargaining
councils are eligible for exemption under section 10(1)(cA)(i), as explained in this Note.
3. Bargaining councils
3.1 Establishment
The LRA defines “bargaining council” as – 15
“a bargaining council referred to in section 27 and includes, in relation to the public service,
the bargaining councils referred to in section 35”.
6 Section 23(1) of the Constitution.
7 The rights of workers are prescribed in section 23(2) of the Constitution.
8 The term “trade union” as defined in section 213 of the LRA means an association of employees
whose principal purpose is to regulate relations between employees and employers, including any
employers’ organisations.
9 The rights of employers are prescribed in section 23(3) of the Constitution.
10 The term “employers’ organisation” as defined in section 213 of the LRA means any number of
employers associated together for the purpose, whether by itself or with other purposes, of
regulating relations between employers and employees or trade unions.
11 Section 23(4) of the Constitution.
12 Section 23(5) of the Constitution.
13 Section 1 of the LRA.
14 Van Jaarsveld, F, Bakker, A, & Dekker, L (30 November 2017). Labour Law: Part 1. In The Law of
South Africa (LAWSA) 24(1) (Volume Third Edition) in paragraphs 514 and 515. My LexisNexis
[online].
15 Section 213 of the LRA.
Section 27 of the LRA deals with the establishment of bargaining councils and reads
as follows:
“(1) One or more registered trade unions and one or more registered employers’
organisations may establish a bargaining council for a sector and area by –
(a) adopting a constitution that meets the requirements of section 30; and
(b) obtaining registration of the bargaining council in terms of section 29.
(2) The State may be a party to any bargaining council established in terms of this
section if it is an employer in the sector and area in respect of which the bargaining council
is established.
(3) If the State is a party to a bargaining council in terms of subsection (2), any
reference to a registered employers’ organisation includes a reference to the State as a
party.
(4) A bargaining council may be established for more than one sector.”
Section 35 of the LRA dealing with bargaining councils in the public service reads as
follows:
“There will be a bargaining council for—
(a) the public service as a whole, to be known as the Public Service Co-
ordinating Bargaining Council; and
(b) any sector within the public service that may be designated in terms of
section 37.”
Bargaining councils are established by – 16
• registered trade unions, sufficiently representative of the employees’ employed
by an employer in a workplace, to regulate relations between such employees
and their employers or employers’ organisations; and
• registered employers’ organisations comprising a number of employers
associated together to regulate relations between employers and employees
or trade union.
The establishment of a bargaining council is generally a voluntary process.
However, in the public sector, the LRA specifically designates the Public Service Co-
ordinating Bargaining Council as the bargaining council to serve the entire public
service. 17 It also has the authority to establish, change, merge, or dissolve sector-
specific councils as needed. 18 At present, there are several bargaining councils in
which the State is the employer. 19
16 Section 27 of the LRA.
17 The term “public service” as defined in section 213 of the LRA means the national departments,
provincial administrations, provincial departments and government components contemplated in
section 7(2) of the Public Service Act 103 of 1994 but excluding (a) the members of the South
African National Defence Force, (b) the National Intelligence Agency, and (c) the South African
Secret Service.
18 Sections 35 to 37 of the LRA.
19 Education Labour Relations Council, Public Health and Social Development Sectoral Bargaining
Council, Safety and Security Sectoral Bargaining Council, General Public Service Sectoral
Bargaining Council, and South African Local Government Bargaining Council.
Bargaining councils may apply to the registrar for registration under the LRA by
submitting the required form along with a copy of their constitution. 20 If the registrar is
satisfied that all registration requirements are met, the bargaining council’s name is
entered in the register of councils. 21
Once registered, the registrar issues a certificate of registration specifying the
bargaining council’s registered scope (see 7.2) and provides a certified copy of the
registered constitution to the council. 22 If a court issues an order for the winding up of
a bargaining council, the registrar will cancel the registration by removing its name
from the register of councils. 23
As a result of registration, bargaining councils are required under the LRA to submit
various details to the registrar, including their office-bearers, auditor’s reports, and
financial statements. 24
Accreditation by the Commission is necessary for a bargaining council to perform
dispute resolution functions. 25 Registered bargaining councils must therefore also
provide the Commission with certified copies of all collective agreements concluded
as well as the details regarding the admission and resignation of parties. 26
3.2 Constitution of a bargaining council
The registered trade unions and registered employers’ organisations that establish a
bargaining council are required to agree on a constitution. 27 In accordance with the
LRA, the constitution must at least provide for the following essential elements: 28
• The process for making decisions.
• Procedures for appointing representatives and their alternatives, ensuring that
halve are appointed by the trade unions and the other half by the employers’
organisations, that are party to the bargaining council.
• Guidelines for when and how representatives must vacate their positions. as
well as the process for appointing replacements.
• Provisions for the representation of small and medium enterprises.
• Rules for convening and conducting meetings, including quorum requirements
and the recording of meetings.
• The appointment or election of office-bearers29 and officials, 30 their functions,
and the circumstances and procedures for their removal.
20 Section 29(1) of the LRA.
21 Section 29(11) of the LRA.
22 Section 29(15) of the LRA.
23 Section 61(2) of the LRA.
24 Section 54(2) of the LRA.
25 Section 52 of the LRA.
26 Section 54(3) of the LRA.
27 Refusal to agree to the establishment of a bargaining council amounts to a refusal to bargain under
section 64(2) of the LRA.
28 Section 30(1) of that Act.
29 The term “office-bearer” as defined in section 213 of the LRA means a person who holds office and
who is not an official.
30 The term “official” as defined in section 213 of the LRA means a person employed as secretary or
in any other prescribed capacity, whether or not that person is employed in a full-time capacity.
• The establishment and functioning of committees.
• Procedures for resolving disputes.
• Procedures for granting exemptions from collective agreements.
• Regulations for the banking and investment of funds, as well as the use of those
funds.
• Delegation of powers and functions.
• Criteria for admitting additional parties.
• Procedures for amending the constitution.
• Procedures for winding up the council.
The same requirements apply to the constitution of a bargaining council within the
public service, with two exceptions, namely, that any reference to an “employers’
organisation” should be interpreted as referring to the State as the employer, 31 and the
requirement about representation of small and medium enterprises does not apply.
Additionally, the constitution may provide for the establishment and functioning of
chambers of the bargaining council at both national and regional levels. 32
Once a bargaining council is registered, its constitution becomes legally binding on the
parties to the bargaining council. 33 A bargaining council’s constitution is considered a
collective agreement and therefore enforceable.
4. The law
Section 10(1)(cA) is quoted in the Annexure.
5. Application of the law
The receipts and accruals of any institution, board, or body, except a company as
defined in the Companies Act, 34 any co-operative, close corporation, trust, or water
services provider established by or under any law may be exempt under
section 10(1)(cA)(i) if the strict requirements of that section are met. 35
The receipts and accruals will be exempt (see 11) only if –
• the Commissioner has granted approval (see 6), subject to any conditions
considered necessary to ensure that the prescribed activities (see 7) are wholly
or mainly directed to the furtherance of the sole or principal object (see 6.3); 36
and
• the founding document meets all the prescribed requirements (see 8). 37
31 Section 30(2) of the LRA.
32 Section 30(4) of the LRA.
33 Section 29(11) of the LRA.
34 Act 71 of 2008.
35 For commentary, see the Tax Exemption Guide for Institutions, Boards, or Bodies.
36 Paragraph (a) of the first proviso to section 10(1)(cA).
37 Paragraph (b) of the first proviso to section 10(1)(cA).
6. Approval requirements
The requirements of section 10(1)(cA)(i) relevant to registered bargaining councils are
considered below.
6.1 Meaning of institution, board, or body
The phrase “institution, board, or body” in section 10(1)(cA)(i) is not defined in the Act.
The words should therefore be interpreted according to their ordinary meaning as
applied to the subject matter with regard to which they are used. 38 The Cambridge
Dictionary describes the words separately as follows:
• “Institution” is “an organization that exists to serve a public purpose such as
education or support for people who need help.” 39
• “Board” is “the group of people who are responsible for controlling the operation
of a public or private organization.” 40
• “Body” is “a group of people who have joined together for a particular reason.” 41
The well-established principles for interpreting statutes require that the words, context,
and purpose of a provision must be considered. 42 Using these principles, with the
dictionary meanings, section 10(1)(cA)(i) is understood to mean that an institution,
board, or body is –
• established by or under law to perform certain functions;
• a formal structure generally with a constitution or governing rules; and
• formed to achieve a sole or principal object, such as research, education, or
providing services to the State, or members of the general public.
Based on the legal status and requirements in the LRA, a registered bargaining council
is considered an institution, board, or body for the purposes of section 10(1)(cA)(i).
6.2 Established under any law
Section 10(1)(cA)(i) applies to an institution, board, or body established by or under
any law. Although the word “any” is of wide and unqualified generality, it may be
restricted by the subject matter or the context. 43
The Interpretation Act defines “law” as – 44
“any law, proclamation, ordinance, Act of Parliament, or other enactment having the force
of law”.
38 Kellaway, EA (1995). Principles of legal interpretation of statutes, contracts and wills at page 224.
Butterworths South Africa. Also, see Steyn, LC (1981). Die uitleg van wette (Fifth Edition) pages 4
to 7. Juta and Company (Pty) Ltd.
39 https://dictionary.cambridge.org/dictionary/english/institution [Accessed 28 May 2026].
40 https://dictionary.cambridge.org/dictionary/english/board [Accessed 28 May 2026].
41 https://dictionary.cambridge.org/dictionary/english/body [Accessed 28 May 2026].
42 C:SARS v United Manganese of Kalahari (Pty) Ltd 2020 (4) SA 428 (SCA) 82 SATC 444.
43 CIR v Ocean Manufacturing Ltd 1990 (3) SA 610 (A), 52 SATC 151 at 161.
44 Section 2 of Act 33 of 1957.
The phrase “any law” as used in section 10(1)(cA)(i) was considered in ITC 1788.
The issue that needed to be decided was whether the words “any law” refers to South
African statutes only, or whether laws of federal states of the United States of America
are included in that definition. Bertelsmann J held: 45
“Although this argument is attractive and I was initially inclined to uphold it (because the
result may be regarded as iniquitous for the appellant if it is not) a moment’s reflection must
show that the legislature could not but have intended South African statutes. The entire
purpose of the Income Tax Act is to control the revenue accruing to the state from taxes
levied upon the income of the citizenry.
To give recognition to creatures created by foreign statutes without any qualification or
definition might seriously endanger the object of the entire Income Tax Act.
The entities which the legislature clearly had in mind to exempt from the tax are those to
which Mr Spilg referred: parastatals created by statutes passed by the South African
Parliament, such as the South African Bureau of Standards.”
The phrase “any law” in section 10(1)(cA)(i) includes any law such as the Constitution,
which is the supreme law46 of South Africa, as well as Acts passed by the South African
Parliament, 47 which are considered national legislation. 48
The reference in section 10(1)(cA)(i) to an institution, board, or body “established
under any law” means that the relevant national legislation provides in general for the
establishment of a type of institution, board, or body to perform specific functions.
Typically, the legislation does not mention the institution, board, or body by name.
It may require that the establishment of such an institution, board, or body be published
by the responsible Minister in the Government Gazette.
Institutions, boards, or bodies established under any law usually have constitutions
that may include provisions prescribed by the regulating national legislation, such as
their objectives, powers, functions, governance, duties, and financial matters.
The LRA regulates several key areas, such as how bargaining councils are established
and the validity of collective agreements. 49 To carry out their centralised bargaining
function, bargaining councils are required to adopt a constitution (see 3.2) and apply
to the registrar for registration (see 3.1). 50 Only those bargaining councils that are
registered under the LRA 51 are recognised as juristic persons, possessing their own
legal rights and responsibilities as set out in the LRA. The certificate of registration
issued by the registrar confirms that a bargaining council is a body corporate. 52
45 (2004) 67 SATC 161 (G) at 164.
46 Section 2 of the Constitution.
47 The term “Parliament” is defined in section 2 of the Interpretation Act 33 of 1957.
48 The term “national legislation” as defined in section 239 of the Constitution generally means
legislation made under an Act of Parliament.
49 Collective labour landscape, an employer’s guide to collective labour law. (August 2024). Cliffe
Dekker Hofmeyr. Available online at www.cliffedekkerhofmeyr.com/export/sites/cdh/practice-
areas/guides/downloads/Collective-Labour-Landscape-An-Employers-Guide-to-Collective-
Labour-Law.pdf [Accessed 28 May 2026].
50 Section 27(1) of the LRA.
51 Section 29 of the LRA deals with the registration of bargaining councils.
52 Section 50(1) of the LRA.
Therefore, once registered under the LRA and having met all the prescribed
requirements of section 10(1)(cA)(i) (see 8), bargaining councils may be approved by
the Commissioner as institutions, boards, or bodies.
6.3 Sole or principal object
The concept “furtherance of the sole or principal object” is fundamental to
section 10(1)(cA)(i). The Income Tax Act does not define the words “furtherance”,
“sole”, “principal” or “object”.
The CollinsDictionary.com describes “furtherance” of something as – 53
“the activity of helping it to be successful or be achieved.”
The following words are described in Dictionary.com:
• “Sole” as “being the only one; only”. 54
• “Principal” as “first or highest in rank, importance, value, chief”. 55
• “Objective” as “something that one’s efforts or actions are intended to attain,
accomplish, purpose, goal, target”. 56
In ITC 1569 57 reference was made to the following two meanings of “principal” in the
Oxford English Dictionary:
“1. First or highest in rank or importance; that is at the head of all the rest; of the greatest
account or value; foremost.
2. Less definitely: belonging to the first or highest group in rank or importance; of the first
order; main, prominent, leading.”
The “object” of a bargaining council is determined not by the subjective goals of its
controllers, but the activities it is mandated to perform under its founding document
(see 3.2). This object is the bargaining council’s aim, intention, purpose, or goal.
The only or predominate object of a bargaining council is advanced, progressed, or
achieved when any of the prescribed activities (see 7) are carried on. Accordingly, a
bargaining council must first carry on its sole or principal object and, in doing so,
engage in the prescribed activities intended to advance that object. In this context,
“activities” means only those activities that are prescribed to further the council’s sole
or principal object, not any other activities. Since registered bargaining councils
qualifying for approval and exemption under section 10(1)(cA)(i) benefit from tax
privileges, the phrase “sole or principal object” must be interpreted strictly, based on
the facts of each individual case. 58
The sole or principal object of registered bargaining councils is to promote and facilitate
collective bargaining between trade unions and employers’ organisations in an orderly,
organised and regulated manner. Through this process, they determine wages,
employment terms and conditions, and address other matters of mutual interest to
employees and employers within a specific sector and geographical area (see 7.2).
53 www.collinsdictionary.com/dictionary/english-word/furtherance [Accessed 28 May 2026].
54 www.dictionary.com/browse/%20sole [Accessed 28 May 2026].
55 www.dictionary.com/browse/%20principal [Accessed 28 May 2026].
56 www.dictionary.com/browse/objective%20 [Accessed 28 May 2026].
57 (1993) 56 SATC 86 (C) at 90.
58 CIR v D & N Promotions (Pty) Ltd 1995 (2) SA 296 (A), 57 SATC 178 at 182.
7. Prescribed activities
Section 10(1)(cA)(i) requires that an institution, board, or body must undertake specific
prescribed activities in the furtherance of its sole or principal object. The prescribed
activities registered bargaining councils undertake in the furtherance of their sole or
principal object are considered below.
7.1 Necessary and useful services provided to the State, and the general public
Registered bargaining councils, in the furtherance of their sole or principal object
(see 6.2), provide necessary, and useful services to both the State and members of
the general public. 59
The phrase necessary and useful services provided to the State generally refers to
services that are necessary for the functioning of government and beneficial to the
public interest. These services are generally recognised by law as contributing to the
effective administration of the State and supporting its constitutional and statutory
obligations.
Necessary and useful services to members of the general public are for the well-being
and development of individuals and the general community.
Employees generally cannot compel employers to improve employment terms and
conditions unless an agreement is reached, which is achieved through bargaining.
In Metal and Allied Workers Union v Hart Ltd, 60 it was opined that “bargaining” was
defined to mean “to haggle or wrangle to arrive at some agreement on terms of give
and take”, while “negotiate” was considered similar, meaning “to confer with a view to
compromise and agreement”. This process is dynamic, with both parties applying
pressure to achieve a fair and mutually acceptable agreement. 61 If consensus cannot
be reached, industrial action, such as strikes and lockouts, may follow. 62
Such industrial action can lead to financial losses, reduced investment, economic
instability, and social unrest. These disruptions can decrease productivity and growth,
prompting employers to adopt technology that reduces workforce needs, which
negatively affects both workers and the broader economy. 63 The right to strike is a key
mechanism that compels employers and employees to negotiate and bargain to reach
agreements.
The LRA promotes collective bargaining to regulate employment terms and conditions
and resolve labour disputes. 64 Through collective bargaining, trade unions and
employers’ organisations negotiate on behalf of their members. Bargaining councils
conduct collective bargaining at national, regional, and local levels on a wide range of
employment matters. Nationally, they address core employment terms like wages,
benefits, and leave. Regionally, they focus on allowances and specific working
59 Section 10(1)(cA)(i)(bb).
60 (1985) 6 ILJ 478 (IC).
61 Barter, H (nd). Bargaining councils in South African law: implications for employers. Barter McKellar.
Available online at www.bartermckellar.law/employment-law-explained/bargaining-councils-
in-south-african-law-implications-for-employers [Accessed 28 May 2026].
62 Leppan, F, Govindvee, A, & Cripps, B (2016). Bargaining in bad faith in South African labour law an
antidote? Obiter, Academy of Science South Africa. Available online at
https://obiter.mandela.ac.za/article/download/11515/16758/69504 [Accessed 28 May 2026].
63 As above.
64 Chapter III of the LRA.
conditions. Locally, they manage workplace-specific issues such as training, equity,
restructuring, and health and safety. 65
Various organs of state are responsible for regulating the labour relationship, and
NEDLAC provides a platform for employers, employees, and the State to jointly
manage these relationships through co-operation, negotiation and joint decision-
making. 66 The State is not only a regulator but also an employer, with the LRA
specifically providing for bargaining councils within the public service. 67
Constructive bargaining benefits employers, employees, and the State by ensuring fair
labour practices, protecting and advancing workers’ socio-economic interests, and
promoting reasonable working conditions, fair wages, and equitable profit sharing.
These practices support a strong economy and reinforce democracy. 68
7.2 Activities to promote industry
Registered bargaining councils in the furtherance of their sole or principal object
(see 6.2) carry on of activities designed to promote industry, or any branch of such an
industry. 69
The words “promote”, “industry”, and “branch” are not defined in the Income Tax Act.
Dictionary.com provides the following descriptions:
• “promote” is “to help or encourage to exist or flourish; further”; 70
• “industry” is “the aggregate of manufacturing or technically productive
enterprises in a particular field, often named after its principal product”; 71 and
• “branch” is “any member or part of a body or system; a section or subdivision.” 72
After the registrar publishes the material particulars of a bargaining council’s
application for registration by notice 73 in the Government Gazette, 74 NEDLAC
demarcates an appropriate sector 75 and an area 76 to the council, 77 forming its
“registered scope” 78 (except for the public service). A registered scope can include
65 Bhorat, H, van der Westhuizen, C, & Goga, S (September 2007). Analysing wage formation in the
South African labour market: the role of bargaining councils. School of Economics, University of
Cape Town. Available online at www.commerce.uct.ac.za/dpru/ [Accessed 28 May 2026].
66 Ferreira, GM (1 November 2005). South African labour: a tripartite relationship? Journal of Public
Administration 3.2 (Volume 40). Sabinet African Journals available online at
https://journals.co.za/doi/abs/10.10520/EJC51420.
67 Part D in Chapter III of that Act.
68 The role of collective bargaining in South Africa. (11 July 2023). Consolidated Employers’
Organisation. Available online at www.mondaq.com/southafrica/employee-rights-labour-
relations/1341484/the-role-of-collective-bargaining-in-south-africa [Accessed 28 May 2026].
69 Section 10(1)(cA)(i)(cc).
70 www.dictionary.com/browse/promote [Accessed 28 May 2026].
71 www.dictionary.com/browse/industry [Accessed 28 May 2026].
72 www.dictionary.com/browse/branch [Accessed 28 May 2026].
73 The purpose of the notice is to allow the general public to lodge, within a prescribed period, an
objection to the application.
74 Section 29(3) of the LRA.
75 The term “sector” as defined in section 213 of the LRA means an industry or a service.
76 The term “area” as defined in section 213 of the LRA includes any number of areas, whether or not
contiguous.
77 Section 29(7) to (10) of the LRA.
78 The term “registered scope” is defined in section 213 of the LRA.
industries such as forestry, agriculture, building, clothing, civil engineering, chemical,
diamond cutting, food, restaurant, catering and allied trades, fishing, electrical,
furniture manufacturing, and personal care like hairdressing, cosmetology, beauty and
skincare. 79 Registered bargaining councils can be established for more than one
sector. 80 Except for those in the public service, a registered bargaining council’s
authority is limited to the sector and geographic area specified in its registration
certificate, 81 which can be national, regional, or local. 82
All trade unions, employers’ organisations, and employers have the right to participate
in collective bargaining. 83 Collective bargaining is essential for building ongoing
relationships between trade unions and employers, promoting stability and co-
operation within workplaces and across sectors. 84 Employers benefit from industrial
peace and operational stability, while employees represented by their trade union use
bargaining to secure fair work distribution, rewards, and job security. 85
Employers within a registered scope are bound by the main collective agreement
concluded by the relevant registered bargaining council for that sector and area.
Both trade unions and employers’ organisations have a constitutional right to apply for
membership in a council. 86
Registered bargaining councils play a central role in advancing industries by facilitating
collective bargaining. They provide a structured platform for employers and trade
unions to negotiate and conclude collective agreements on matters such as
employment terms, wages, benefits, and other sector-specific concerns.
Furthermore, registered bargaining councils are instrumental in resolving labour
disputes, including unfair dismissals, wage disagreements and breaches of
employment terms, through processes like conciliation and arbitration. This helps to
maintain industrial peace and stability. By setting industry standards for minimum
wages, working conditions, and disciplinary procedures, registered bargaining councils
help ensure fairness and consistency for both employers and employees. They protect
workers’ socio-economic interests and contribute to industry development by
managing employee benefit funds, such as pension, provident, medical aid,
unemployment, holiday and similar schemes or funds. 87 Additionally, they ensure
compliance with collective agreements, encourage skills development and industry
training initiatives, and formulate policy recommendations for NEDLAC.
79 Bhorat, H, van der Westhuizen, C, & Goga, S (September 2007). Analysing wage formation in the
South African labour market: the role of bargaining councils. School of Economics, University of
Cape Town. Available online at www.commerce.uct.ac.za/dpru/ [Accessed 28 May 2026].
80 Section 27(4) of the LRA.
81 Section 29(15)(a) of the LRA.
82 Section 28(1) and 50(2) of the LRA.
83 Section 1 of the LRA.
84 Leppan, F, Govindvee, A, & Cripps, B (2016). Bargaining in bad faith in South African labour law an
antidote? Obiter, Academy of Science South Africa. Available online at
https://obiter.mandela.ac.za/article/download/11515/16758/69504 [Accessed 28 May 2026].
85 Barter, H (nd). Bargaining councils in South African law: implications for employers. Barter McKellar.
Available online at www.bartermckellar.law/employment-law-explained/bargaining-councils-
in-south-african-law-implications-for-employers [Accessed 28 May 2026].
86 Masupye, E (2 August 2021). The role of collective bargaining systems in South Africa.
Consolidated Employers’ Organisation. Available online at https://ceosa.org.za/the-role-of-
collective-bargaining-systems-in-south-africa/ [Accessed 28 May 2026].
87 These schemes or funds established by a bargaining council are under section 28(3) of the LRA
subject to the laws relating to pension, provident or medical aid schemes or funds.
Collective agreements concluded by registered bargaining councils can be extended
to include non-parties within the council’s jurisdiction if a written request is made to the
Minister of Employment and Labour. 88 The Minister of Employment and Labour may
extend the collective agreement by publishing it in the Government Gazette, provided
all requirements have been met. This prevents non-member employers from gaining
an unfair advantage over members.
For these reasons, registered bargaining councils are recognised as carrying on
activities designed to promote industry or its various sectors. 89
8. Prescribed requirements to be met for approval by Commissioner
A registered bargaining council wishing to obtain approval from the Commissioner as
an institution, board, or body under section 10(1)(cA)(i) must submit the required
application to SARS. 90 This application standardises the approval process, ensuring
all necessary information and documentation are provided to the Commissioner.
However, the application itself does not determine whether approval is granted, as it
serves only as an administrative tool for SARS to consider the application.
If approval and exemption under section 10(1)(cA)(i) is granted, the Commissioner will
issue a letter to the approved bargaining council. This letter includes a unique
exemption reference number, which is a different reference number to the taxpayer
reference number 91 allocated on registration for income tax. The approved bargaining
council must retain this approval letter as part of its records.
Should the Commissioner not grant approval, the registered bargaining council will
receive written notification outlining the reasons for the decision. This decision can be
challenged through objection and appeal procedures. A registered bargaining council
not approved as an institution, board, or body will be liable for income tax and other
taxes and duties as a normal taxpayer (see 10).
The constitution (see 3.2) of a registered bargaining council must be submitted to the
Commissioner when applying for approval under section 10(1)(cA)(i). For a registered
bargaining council to be approved as an institution, board, or body under
section 10(1)(cA)(i), its founding document must meet the prescribed requirements. 92
The constitution will be examined as a whole to ensure compliance. Because the LRA
outlines specific procedures for amending the constitution of a registered bargaining
council, it may not comply with the prescribed requirements at the time the application
is submitted. In these instances, the Commissioner may confirm approval, subject to
conditions deemed necessary to ensure that the council’s prescribed activities are
wholly or mainly directed at the furtherance of its sole or principal object until the
constitution is formally amended (see 9).
The prescribed requirements for approval as an institution, board, or body under
section 10(1)(cA)(i) are considered below.
88 Section 32 of the LRA.
89 Section 10(1)(cA)(i)(cc).
90 Additional information on how to apply is available on the SARS website. Navigate to Businesses
and Employers Tax Exempt Institutions.
91 The term “taxpayer reference number” as defined in section 1 of the Tax Administration Act means
the number referred to in section 24 of the same Act.
92 Paragraph (b) of the first proviso to section 10(1)(cA).
8.1 Prohibition on distributions
An institution, board, or body is, under its constitution, not permitted to distribute any
amount to any person. 93 The reference to “any person” is not limited to natural persons,
as the definition of “person” 94 in the Income Tax Act does not exclude companies, other
incorporated entities, associations of persons, or statutory bodies. 95 This prohibition
on distributions is absolute. Therefore, the requirement is not subject to the
Commissioner’s discretion and cannot in general or in a particular instance be waived,
deferred, or reduced. Even if a minimal amount is distributed or a distribution occurs
as an isolated or once-off event, the institution, board, or body may be subject to the
withdrawal of the approval(see 10).
The words “distribute”, and “amount” are not defined in the Income Tax Act.
The Cambridge Dictionary describes “distribute” as – 96
“to give something out to several people, or to spread or supply something.”
The meaning of “amount” 97 was judicially considered in WH Lategan v CIR 98 in relation
to its use in the definition of “gross income” and the following dictum of Watermeyer J
has been cited with approval in a number of other cases: 99
“In my opinion, the word ‘amount’ must be given a wider meaning, and must include not
only money but the value of every form of property earned by the taxpayer, whether
corporeal or incorporeal, which has a money value.”
In the landmark case of C: SARS v Brummeria Renaissance (Pty) Ltd & others, 100 it
was held that if a receipt or accrual cannot be turned into money, it does not necessarily
mean it has no money value. The “turn into money” test was merely one of the tests
for determining whether an accrual had a money value. The court confirmed that the
test was objective, not subjective.
Registered bargaining councils generally meet this prescribed requirement because
their constitutions specify how their funds may be used (see 3.2). Additionally, their
funding agreements (see 8.2) outline the specific purposes for which these funds can
be used.
Non-exhaustive examples of what would not constitute a distribution of any amount by
a registered bargaining council to any person include –
• any expenditure such as the purchasing of assets, the paying off debts or any
funds expended in the operations of a registered bargaining council
undertaking its prescribed activities (see 8) in furtherance of its sole or principal
object (see 6.2);
• investments (see 8.2);
• any bona fide donations made by a bargaining council; or
93 Paragraph (b)(i) of the first proviso to section 10(1)(cA).
94 Section 1(1).
95 Foreign partnerships are specifically excluded.
96 https://dictionary.cambridge.org/dictionary/english/distribute [Accessed 28 May 2026].
97 For commentary, see the Comprehensive Guide to Capital Gains Tax.
98 1926 CPD 203, 2 SATC 16 at 19.
99 Also, see CIR v Butcher Bros (Pty) Ltd 1945 AD 301, 13 SATC 21 at 34 and CIR v People’s Stores
(Walvis Bay) (Pty) Ltd 1990 (2) SA 353 (A), 52 SATC 9 at 21.
100 C: SARS v Brummeria Renaissance (Pty) Ltd & others 2007 (6) SA 601 (SCA), 69 SATC 205.
• the transfer of any remaining assets on dissolution (see 8.3).
8.2 Use of funds
An institution, board, or body is, under its constitution, required to use its funds solely
for investment or for the object for which it has been established. 101 The “object” refers
to the sole or principal object (see 6.3) of the institution, board, or body as set out in its
founding document.
The word “funds” is described in BusinessDictionary.com as follows: 102
“All the financial resources of a firm, such as cash in hand, bank balance, accounts
receivable. Any change in these resources is reflected in the firm’s financial position.”
Having regard to the above, “funds” refers to the financial resources, namely, money
available to a business for spending in the form of cash, liquid securities and credit
lines. 103
The funds of an institution, board, or body may be invested as desired provided the
investment does not amount to an indirect distribution of profits or the award of an
impermissible benefit. However, fiduciaries 104 are expected to act with prudence,
integrity and reasonable care. Investopedia explains “investment” as follows: 105
“An investment is an asset or item acquired with the goal of generating income or
appreciation. In an economic sense, an investment is the purchase of goods that are not
consumed today but are used in the future to create wealth. In finance, an investment is a
monetary asset purchased with the idea that the asset will provide income in the future or
will later be sold at a higher price for a profit.
The term ‘investment’ can refer to any mechanism used for generating future income. In
the financial sense, this includes the purchase of bonds, stocks or real estate property.
Additionally, a constructed building or other facility used to produce goods can be seen as
an investment. The production of goods required to produce other goods may also be seen
as investing.”
Registered bargaining councils generally receive their funding through levies paid by
both employers and employees within the industry for which the bargaining council is
registered. The registered bargaining council’s constitution (see 3.2) specifies the
purposes for which these funds can be used. Under the LRA, a bargaining council is
required to enter into a funding agreement (a type of collective agreement) that outlines
the allocation of funds for – 106
• operational and administrative expenses, such as salaries, office costs, and
meeting expenses;
• costs related to dispute resolution and negotiations;
101 Paragraph (b)(ii) of the first proviso to section 10(1)(cA).
102 www.bussinessdictionary.com/definition/funds [Accessed 28 May 2026].
103 See the meaning of “financial resources” as described in BusinessDictionary.com available online
at www.bussinessdictionary.com/definition/financial-resources [Accessed 28 May 2026].
104 The Cambridge Dictionary available online at https://dictionary.cambridge.org/dictionary/
english/fiduciary [Accessed 28 May 2026] describes “fiduciary” as “relating to the responsibilities
of a person or organization that manages property or money belonging to another person or
organization”.
105 Hayes, A (31 May 2024). Investment: how and where to invest. Investopedia. Available online at
www.investopedia.com/terms/i/investment.asp [Accessed 28 May 2026].
106 Section 32A of the LRA.
• training and education schemes; or
• pension, provident, medical aid, sick pay, holiday, unemployment and training
schemes or funds, or any similar schemes or funds for the benefit of one or
more of the parties to the bargaining council or their members.
Any surplus funds held by a registered bargaining council or by a fund, 107 it has
established, may only be invested in savings accounts, permanent shares, or fixed
deposits at registered banks or financial institutions, internal registered stocks as
described in the Exchequer Act, 108 registered unit trusts, or other investment vehicles
approved by the registrar. 109
Registered bargaining councils generally comply with this prescribed requirement,
since the LRA sets clear conditions and rules regarding how their funds must be
managed and used.
8.3 Dissolution
On dissolution, an institution, board, or body is under its constitution required to
transfer its assets to some other institution, board, or body, which has been granted
exemption from tax under section 10(1)(cA)(i) and which has objects similar to those
of such institution, board, or body. 110
Typically, the process of winding-up of a registered bargaining council occurs before
its formal dissolution. The court may order the dissolution of a bargaining council in
two scenarios: firstly, if the council itself has resolved to wind up its affairs and has
applied for a court order to implement that decision, or secondly, if the registrar or any
party to the council applies to the court and the court is satisfied that the council can
no longer function. 111
Once a winding up order is issued, the court may appoint a liquidator and determine
the liquidator’s fees, 112 which are paid first from the council’s assets. The court must
also notify the registrar. 113
During the winding-up process, all assets are recovered and realised. The proceeds
of such realisation are first used to discharge the winding-up (liquidation) costs, then
to pay creditors according to insolvency laws. Any remaining assets are distributed as
specified in the registered bargaining council’s founding document (see 3.2).
Therefore, on the dissolution of a registered bargaining council, all assets should be
realised and transferred. While the LRA allows a council’s constitution to specify how
assets are distributed on dissolution, to qualify for approval, no assets may be
distributed to individuals or taxable entities. Instead, assets must be transferred to
107 Any fund refers to a pension, provident, medical aid, sick pay, holiday, unemployment and training
schemes or funds, or any similar schemes or funds for the benefit of the parties to the bargaining
council or their members contemplated in section 28(1)(g) of the LRA.
108 Act 66 of 1975.
109 Section 53(5) of the LRA.
110 Paragraph (b)(iii)(aa) of the first proviso to section 10(1)(cA).
111 Section 59(1) of the LRA.
112 Section 59(3) and (4) of the LRA.
113 Section 61(1) of the LRA.
institutions, boards, or bodies that are also exempt under section 10(1)(cA)(i) and have
similar, though not necessarily identical, 114 objectives.
Trade unions and employers’ organisations that establish a bargaining council must
ensure this dissolution requirement is either included in the constitution or complied
with if they want the registered bargaining council to be eligible for approval and for its
receipts and accruals to qualify for exemption under section 10(1)(cA)(i).
If, after all liabilities have been discharged, any assets remain that cannot be disposed
of according to the constitution, the liquidator must in accordance with the LRA, realise
them and pay the proceeds to the Commission for its own use. 115 This will meet the
prescribed dissolution requirement, provided the Commission is an institution, board,
or body approved by the Commissioner.
Assets and liabilities of any pension, provident or medical aid scheme or fund
established by a registered bargaining council are treated as those of the registered
bargaining council, unless – 116
• the parties agree to continue the scheme or fund separately after council’s
winding-up;
• the Minister of Employment and Labour approves the continuation of the
scheme or fund; and
• an application has been made in accordance with the provisions of the laws
applicable to pension, provident or medical aid schemes or funds, for the
registration of that scheme or fund under those provisions. 117
If an approved bargaining council fails to transfer, or to take reasonable steps to
transfer to a similar entity, the remaining assets as required, the undistributed
accumulated net revenue will be deemed taxable income accruing to that council
during the year of assessment 118 in which dissolution took place. 119
The concept “accumulated net revenue” is not defined in the Income Tax Act.
Dictionary.com describes “accumulated” as –120
“to gather or collect, often in gradual degrees, heap up”.
The words “net revenue” are described in BusinessDictionary.com as follows: 121
“Gross total minus any returns and any other negative revenue.”
114 See the meaning of “similar” as described in the Free Dictionary available online at
www.thefreedictionary.com/similar [Accessed 28 May 2026] as “having a resemblance in
appearance or nature; alike though not identical”.
115 Section 59(5) of the LRA.
116 Section 59(6) of the LRA.
117 The Minister of Employment and Labour under section 59(8) of the LRA may by notice in the
Government Gazette declare the rules of a scheme or fund that continues to be a separate scheme
or fund despite the winding-up of the bargaining council is binding on any employees and
employer(s) that fell within the registered scope of the council immediately before it was wound up.
118 The term “year of assessment” is defined in section 1(1).
119 Paragraph (b) of the second proviso to section 10(1)(cA).
120 www.dictionary.com/browse/accumulated [Accessed 28 May 2026].
121 www.bussinessdictionary.com/definition/net-revenue [Accessed 28 May 2026].
The amount of accumulated net revenue is therefore the total undistributed profits or
revenue, which can include amounts of a capital or revenue nature.
The term “taxable income” is defined as – 122
“the aggregate of—
(a) the amount remaining after deducting from the income of any person all the
amounts allowed under Part I 123 of Chapter II 124 to be deducted from or set
off against such income; and
(b) all amounts to be included or deemed to be included in the taxable income
of any person in terms of this Act”.
(Footnotes added)
If an approved bargaining council is found to be guilty of such a transgression (failing
to transfer or take reasonable steps to transfer to a similar entity, its remaining assets
as required), it will not be permitted to deduct any further tax allowances or deductions
from its accumulated net revenue. This is because its accumulated net revenue is
deemed to be taxable income, calculated after all allowances and deductions have
already been allowed.
9. Approval conditions imposed by the Commissioner
The Commissioner may grant approval to a registered bargaining council even if its
constitution does not fully meet the prescribed requirements (see 8). However, the
Commissioner will impose specific conditions deemed necessary to ensure that the
registered bargaining council’s prescribed activities (see 7) are wholly or mainly
directed towards the furtherance of its sole or principal object (see 6.2). 125
Determining whether a prescribed activity undertaken by a registered bargaining
council is wholly or mainly directed towards the furtherance of its sole or principal
object will be a question of fact. The prescribed activity does not need to be wholly
directed to the furtherance of its sole or principal object. It is sufficient if the activity is
mainly directed for that purpose. In practice, SARS requires that more than 50% of a
prescribed activity, measured by factors such as time or area usage, should be
directed towards the furtherance of the registered bargaining council’s sole or principal
object.
The prescribed requirements, which may include the proper use of funds, prohibition
on distributions, and the transfer of remaining assets on dissolution, can be included
as conditions in the Commissioner’s approval letter (see 6). This letter is binding on
the approved bargaining council, and any non-compliance will result in the same
penalties and actions 126 (see 10) as if the conditions were part of the approved
bargaining council’s founding document (see 3.2). As each registered bargaining
council’s circumstances may differ, the Commissioner will consider each case on its
own merits to determine the appropriate conditions to be imposed.
122 Section 1(1).
123 Deals with normal tax and comprises of section 5 to 37G.
124 The heading of that chapter is “The Taxes”.
125 Paragraph (a) of the first proviso to section 10(1)(cA).
126 Second proviso to section 10(1)(cA).
The approved bargaining council will be required to incorporate the relevant prescribed
requirements (see 8) into its founding document within a reasonable period.
This period is generally 12 months from the date of the approval letter issued by the
Commissioner, or the date on which any other amendment is effected to its
constitution, whichever comes first.
10. Withdrawal of the approval and exemption
The Commissioner may withdraw the approval and exemption of any approved
bargaining council if satisfied that such council has during any year of assessment
failed to comply with section 10(1)(cA)(i). The approval and exemption may be
withdrawn with effect from the commencement of the year of assessment in which the
non-compliance or failure by an approved bargaining council occurred. The decision
by the Commissioner to withdraw the approval and exemption is subject to objection
and appeal.
However, in accordance with the Promotion of Administrative Justice Act, 127 the
Commissioner must provide adequate reasons 128 relating to the non-compliance or
failure to comply with section 10(1)(cA)(i) before the approval and exemption is
withdrawn. 129
If a registered bargaining council’s approval and exemption is withdrawn, it will be
regarded as a normal taxpayer and will be liable for tax on all its taxable income,
namely, gross income less exempt income and allowable deductions, at the rate
applicable to companies, 130 which is currently 27%. 131
11. Exemption from income tax
All the receipts and accruals of an approved bargaining council are fully exempt from
income tax under section 10(1)(cA). All receipts and accruals falling within gross
income, 132 being the total amount, in cash or otherwise, received by or accrued to or
in favour of an approved bargaining council is exempt from income tax under
section 10(1)(cA). The type of receipts or accruals envisaged are those, which are
included in the definition of “gross income”. Receipts or accruals of a capital nature,
which are not deemed to be included in gross income would not be included in the
receipts and accruals referred to in the opening words of section 10(1)(cA), since they
do not require exemption.
Receipts or accruals of a capital nature are taken into account in determining a taxable
capital gain, which is included directly in taxable income. Paragraph 63 of the Eighth
Schedule to the Act contains the rules for disregarding capital gains and losses of a
fully exempt person.
127 Act 3 of 2000.
128 Section 5 of that Act.
129 Minister of Environmental Affairs & Tourism v Phambili Fisheries & another [2003] 2 All SA 616
(SCA).
130 Paragraph (a) of the definition of “company” in section 1(1).
131 The Minister of Finance under section 5(2)(a) may announce different rates in the national annual
budget, which are published annually in the Rates and Monetary Amounts and Amendment of
Revenue Laws Act.
132 The term “gross income” is defined in section 1(1).
Approved bargaining councils, in addition to being exempt from the payment of income
tax on their receipts and accruals, also enjoy the benefit of being exempt from certain
other taxes, 133 such as donations tax, dividends tax, 134 and capital gains tax. 135
Registered bargaining councils must, however despite their exempt status, fulfil
various tax and administrative responsibilities under the Income Tax Act and the Tax
Administration Act. 136 These include providing required information, updating any
changes to registered details, retain and maintain proper records, submit annual
income tax returns, appoint a representative taxpayer, and follow the procedures for
objection and appeal. 137 In addition, registered bargaining councils must ensure
compliance with other taxes, such as employees’ tax, the skills development levy,
unemployment insurance fund contributions, and value-added tax.
The Tax Exemption Guide for Institutions, Boards, or Bodies deals comprehensively
with other tax exemptions as well as the administrative responsibilities and will
therefore not be repeated in this Note.
12. Section 18A tax-deductible receipts
Section 18A provides for tax deductions of bona fide donations that are actually paid
or transferred during a year of assessment to institutions, boards, or bodies that carry
on public benefit activities 138 in Part II 139 of the Ninth Schedule to the Act, in South
Africa, and are approved by the Commissioner. 140 However, approved bargaining
councils do not qualify for section 18A approval 141 because their sole or principal object
(see 6.2) is not to carry on any public benefit activity in Part II of the Ninth Schedule to
the Act. As a result, even if a registered bargaining council is approved and exempt
under section 10(1)(cA)(i), it is not permitted to issue section 18A receipts 142 for
donations it receives.
133 For commentary, see the Taxation in South Africa.
134 For commentary, see the Comprehensive Guide to Dividends Tax.
135 For commentary, see the Comprehensive Guide to Capital Gains Tax.
136 Act 28 of 2011.
137 Section 3(4)(b). 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 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.
138 The term “public benefit activity” as defined in section 30(1) means any public benefit activity listed
in Part I and any other activity determined by the Minister of Finance by notice in the Government
Gazette to be of a benevolent nature, having regard to the needs, interests and well-being of the
general public.
139 The public benefit activities are listed in the Ninth Schedule to the Act and are divided into Part I
and Part II. Not all public benefit activities listed in Part I are included in Part II. Part II contains a
limited number of PBAs approved by the Minister of Finance for purposes of the approval under
section 18A.
140 Section 18A(1)(a)(ii).
141 Qualifying organisations include certain organisations. 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.
142 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.
Therefore, donations made to approved bargaining councils are not tax-deductible
under section 18A(1), and these councils may not issue section 18A receipts to donor
taxpayers. If a donor taxpayer receives such an invalid receipt, they cannot claim a
deduction under section 18A when calculating their taxable income.
13. Conclusion
Bargaining councils registered under the LRA are central to promoting and facilitating
collective bargaining and maintaining orderly industrial relations in South Africa.
Their activities not only advance economic development but also provide necessary
and useful services to both the State, and members of the general public, and also
promote the industries within their registered scope.
Registered bargaining councils are granted preferential tax treatment under
section 10(1)(cA)(i) if their constitutions meet the prescribed requirements.
These requirements include the proper use of funds, a prohibition on distributions,
and the transfer of remaining assets on dissolution. This preferential treatment
provides a complete exemption from income tax on all receipts and accruals, as well
as exemption from certain other taxes. The preferential tax treatment further ensures
that the resources of registered bargaining councils that have been approved by the
Commissioner as institutions, boards, or bodies are directed towards advancing
collective bargaining, industrial stability, and the broader socio-economic objectives.
Leveraged Legal Products
SOUTH AFRICAN REVENUE SERVICE
Annexure – The law
Section 10(1)(cA)(i)
10. Exemptions.—(1) There shall be exempt from normal tax—
(cA) the receipts and accruals of—
(i) any institution, board or body (other than a company as defined in the Companies Act,
any co-operative, close corporation, trust or water services provider) established by or
under any law and which, in the furtherance of its sole or principal object—
(aa) conducts scientific, technical or industrial research;
(bb) provides necessary or useful commodities, amenities or services to the State
(including any provincial administration) or members of the general public; or
(cc) carries on activities (including the rendering of financial assistance by way of loans
or otherwise) designed to promote commerce, industry or agriculture or any branch
thereof;
(ii) any association, corporation or company contemplated in paragraph (a) of the definition
of “company” in section 1, all the shares of which are held by any such institution, board
or body, if the operations of such association, corporation or company are ancillary or
complementary to the object of such institution, board or body:
Provided that such institution, board, body or company—
(a) has been approved by the Commissioner subject to such conditions as he may deem
necessary to ensure that the activities of such institution, board, body or company are
wholly or mainly directed to the furtherance of its sole or principal object;
(b) is by law or under its constitution—
(i) not permitted to distribute any amount to any person, other than, in the case of such
company, to the holders of shares in that company;
(ii) required to utilize its funds solely for investment or the object for which it has been
established; and
(iii) required on dissolution—
(aa) where the institution, board, body or company is established under any law,
to transfer its assets to some other institution, board or body which has been
granted exemption from tax in terms of this paragraph and which has objects
similar to those of such institution, board, body or company; or
(bb) where the institution, board or body is established by law, to transfer its
assets to—
(A) some other institution, board or body which has been granted
exemption from tax in terms of this paragraph and which has objects
similar to those of such institution, board, body or company; or
(B) to the State:
Provided further that—
(a) where the Commissioner is satisfied that any such institution, board, body or company
has during any year of assessment failed to comply with the provisions of this
paragraph, he may withdraw his approval of the institution, board, body or company with
effect from the commencement of that year of assessment;
(b) where the institution, board, body or company fails to transfer, or take reasonable steps
to transfer, its assets as contemplated in paragraph (b)(iii) of the first proviso, the
accumulated net revenue which has not been distributed shall be deemed for the
purposes of this Act to be an amount of taxable income which accrued to such institution,
board, body or company during the year of assessment contemplated in paragraph (a);
and
Diamond Export Levy Act, 2007
