The Section 18A donation deduction allows a taxpayer to deduct bona fide donations to an approved public benefit organisation (PBO) from their taxable income, provided the PBO issues a valid Section 18A receipt.
What it means
Where an employee donates to a qualifying PBO, the donation reduces taxable income, up to a limit of 10% of taxable income for the year. The PBO must be approved for Section 18A and must issue a receipt; without it, the donation is not deductible. Donations above the 10% cap carry over to the next year.
Where it fits in
An employer can take payroll-giving donations to a Section 18A PBO into account in the monthly PAYE calculation, reducing the tax withheld, as long as the receipt requirement is met. Otherwise the employee claims it on assessment. It maps to a specific IRP5 source code.
Key rules
- Deducts approved donations to a Section 18A PBO from taxable income.
- Capped at 10% of taxable income for the year.
- Requires a valid Section 18A receipt from the PBO.
- Payroll giving can be reflected in monthly PAYE; excess carries forward.
