QUESTION:
What are the benefits of recieving a Section 18A tax certificate for your donations?
ANSWER:
The 10% Rule: You can deduct 100% of the donation amount, up to a maximum of 10% of your taxable income (excluding retirement fund lump sum benefits and severance benefits)
Rollover Provision: If you generously donate more than the 10% limit in a given tax year, you don't lose the deduction. The excess amount simply rolls over and can be deducted in the following tax year.
Deduction vs. Credit: A donation is a tax deduction, not a tax credit. This means the donation lowers the total taxable income SARS uses to calculate what you owe, rather than reducing your final tax bill rand-for-rand.