Understanding IT3(d) Reporting: Navigating South African Tax Compliance for PBOs


In the ever-evolving landscape of South African tax law, keeping up with regulatory updates is vital for nonprofit organisations, particularly those operating under Section 18A. As the annual deadline for submitting IT3(d) certificates approaches, it’s crucial to understand the significance of these requirements and their implications for compliance.

IT3(d) Reporting: A Necessary Evolution

The requirement for PBOs to submit IT3(d) certificates to the South African Revenue Service (SARS) isn’t merely administrative; it’s a response to global imperatives aimed at combating money laundering and terrorist financing. The Financial Action Task Force (FATF), a global watchdog, highlighted the need for enhanced beneficial ownership transparency and improved detection of illicit financial flows. Consequently, South Africa, despite legislative efforts, found itself grey-listed by the FATF in February 2023.

PBOs and the Compliance Imperative

PBOs, including those approved under Section 18A, are not immune to these regulatory pressures. On April 9, 2024, SARS reiterated the responsibilities of PBOs in their Tax-Exempt Institutions Connect, Issue 4. This communication preceded the release of a report, scheduled for April 18th and 19th, evaluating the risk of South African NPOs being exploited for terrorist financing. In response, SARS introduced IT3(d) reporting as a mechanism to mitigate these risks, thereby expanding the scope of third-party data reporting to include Section 18A approved entities.

What This Means for Section 18A Approved PBOs

For Section 18A approved PBOs, the inclusion of IT3(d) reporting represents a significant shift in compliance requirements. These organisations are now obliged to submit IT3(d) tax certificates to SARS for the period between March 1, 2023, and February 29, 2024. Even if a PBO hasn’t issued any Section 18A tax-deductible receipts during this period, they must submit a NIL IT3(d) declaration. Failure to comply not only jeopardises their tax-exempt status but also risks their S18A approval with SARS.

Navigating Compliance: A Call to Action

As the deadline for IT3(d) submissions looms, PBOs must prioritise compliance to safeguard their operations and reputation. This entails understanding the reporting process, gathering requisite information, and ensuring timely submissions. Just as employers diligently approach their IRP5 reconciliations, PBOs must accord the same seriousness to IT3(d) reporting.

In an era of heightened regulatory scrutiny, compliance is non-negotiable for PBOs. By embracing IT3(d) reporting, these organisations contribute to global efforts to combat financial crime while preserving their tax-exempt status. Professional Accountants and Tax Consultants are the choice for people to consider if they want help. As trusted partners in navigating South African tax compliance, we are ready to support PBOs in meeting their obligations and securing their future.

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Now read: Navigating Beneficial Ownership Regulations at CIPC in South Africa