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What tax must a charitable Trust register for?

by , 18 March 2015
What do you know about the tax treatment of a charitable Trust. Must this type of Trust register for income tax and Vat?

Or should the Trust only be registered for Vat and not income tax.

Read on to find out the answer...

Regardless of what Trust it is, it must be registered for income tax

Whether it must be registered for Vat will depend on it meeting the requirements for registration i.e. your revenue exceeds R1 million in a year, and you are making vatable supplies.

For income tax, if the Trust is a charitable Trust and conducts a public benefit activity, then you should consider registering the trust as a Public Benefit Organisation (PBO) with SARS's Tax Exemption Unit (TEU).

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Moreover, being a PBO makesthe income from The trust exempt for income tax purposes.you'll still be required to submit the annual ITR12EI tax return for the Trust, but at least you know there won't be any tax due to SARS.

Most income received by a PBO will not be considered a vatable supply, so generally very few PBO's are also Vat vendors. Make sure to find out whether or not your Trust is actually making any Vat supply to determine whether you need to register as a Vat vendor or not.

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