Page 605 - Juta's Indirect Tax

IN 10 (2) SKILLS DEVELOPMENT LEVIES ACT IN 10 (2)
• complies with the requirements of section 30; and
• is approved by the Commissioner under section 30(3).
Section 10(1)(cN) exempts an approved PBO from normal tax on certain of its receipts and accruals.
5.2 Public bene t activities listed in Part I of the Ninth Schedule
The term ‘public bene t activity’ is de ned in section 30(1), and means –
• any activity listed in Part I of the Ninth Schedule; and
• any other activity determined by the Minister from time to time by notice in the Government Gazette to be of a
benevolent nature, having regard to the needs, interest and well-being of the general public.
Part I of the Ninth Schedule comprises 11 categories, each containing a list of speci c activities that qualify as PBAs. For purposes of the exemption from the payment of SDL, the qualifying PBAs are limited to the following categories in Part I of the Ninth Schedule:
• Welfare and Humanitarian [paragraph 1]
• Health Care [paragraph 2 which is further limited to subparagraphs (a), (b), (c) and (d)]
• Religion, Belief or Philosophy [paragraph 5]
See Annexure A for a detailed description of the PBAs listed under each of the above qualifying categories.
5.3 Carries on
The expression ‘carries on’ is not de ned in the SDL Act. The ordinary dictionary meaning of the expression is ‘engage in (an activity)’.* In this context, ‘carries on’ means that the PBO must conduct the PBAs itself by expending its funds in carrying on the qualifying PBAs.
Example 1 – Carrying on qualifying PBAs
Facts:
ABC Haven is a non-pro t company that provides accommodation and care to neglected and abandoned children. A social worker, house parents and other essential staff employed by the home are responsible for the basic needs and care of these children. ABC Haven has submitted an application for approval as a PBO.
Result:
ABC Haven complies with the requirements of section 30 and will be approved as a PBO because its sole or principal object is to carry on the PBA contemplated in paragraph 1(a) in Part I of the Ninth Schedule (see Annexure A under the category ‘Welfare and Humanitarian’). ABC Haven will also qualify for the exemption from the payment of SDL because it is solely carrying on a qualifying PBA as contemplated in section 4(c)(i) of the SDL Act.
5.4 Provides funds
An organisation that provides funds to other organisations may be referred to as a ‘conduit’ organisation. A ‘conduit’ organisation does not itself carry on approved PBAs but merely passes its funds on to other organisations which themselves carry on PBAs. Paragraph 10 in Part I of the Ninth Schedule provides for a PBO that is a ‘conduit’ which provides funds, assets, services or other resources to other approved PBOs, the national, provincial or local government of the Republic, institutions, boards or bodies established by or under any law or any association of persons carrying on one or more PBAs in Part I of the Ninth Schedule. The exemption from the payment of SDL under section 4(c)(ii) of the SDL Act applies only to a conduit PBO that solely provides funds to PBOs that carry on only the qualifying PBAs (see 4.2). A PBO that provides funds to PBOs as well as to any other organisation as described above will not qualify for the exemption from the payment of SDL under section 4(c)(ii) of the SDL Act.
5.5 Solely
The word ‘solely’ is not de ned in the SDL Act. The ordinary dictionary meaning of the word is ‘one and only, exclusively, entirely, wholly, alone’.† In this context, ‘solely’ means that a PBO must exclusively carry on the qualifying PBAs, or exclusively provide funds to PBOs, which exclusively carry on the qualifying PBAs, in order to qualify for the exemption from the payment of SDL.
* M Wait, S Hawker and C Soanes Oxford Dictionary, Thesaurus and Wordpower Guide (2001) Oxford University Press.
† Oxford Dictionary, Thesaurus and Wordpower Guide above.
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Example 2 – Providing funds to other PBOs solely carrying on qualifying PBAs
Facts:
ABC Haven Trust was established with the sole object of raising funds and accepting donations from the public and corporate entities solely for the bene t of ABC Haven, an approved PBO engaged in the care of neglected and abandoned children.
Result:
ABC Haven Trust complies with the formal requirements of section 30 and will be approved as a PBO. ABC Haven Trust quali es for the exemption from the payment of SDL because it solely provides funds to ABC Haven, an approved PBO that solely carries on the PBA contemplated in paragraph 1(a) in Part I of the Ninth Schedule.