Free from Tax, Not from Rules: What Every Registered Political Party Needs to Know

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No, not just any campaign club qualifies for tax exemption. Only officially registered political parties get the SARS tax break, and that comes with responsibilities. SARS issued Interpretation Note 143, Income Tax Exemption: Registered Political Party (IN143) explaining if a political party is registered under Section 15 of the Electoral Commission Act, all its income is automatically exempt from income tax. No forms. No SARS application. No waiting period. However, it is important to note that this exemption doesn’t apply to independent candidates, campaign teams, or side organisations, unless they’re also fully registered as political parties. To qualify:

• The party must submit a deed of foundation and a constitution.

• It must be listed in the Government Gazette and issued a certificate by the Electoral Commission.

• Only then does it become a “registered party” and unlock the tax break.

What Income Is Exempt?

If you're registered, all receipts and accruals are off SARS’ income tax radar. This includes:

• Membership fees

• Bequests

• Donations (public or private)

• Funding from Parliament or provincial legislatures

• Allocations from public funds like the Multi-Party Democracy Fund

• Income from gala dinners, branded merchandise, or investments.

Even foreign donations are exempt (provided they meet legal criteria). But capital receipts, like once-off property sales, are handled under capital gains tax (CGT) rules, see more on that below.

What About Other Taxes?

Being income-tax exempt doesn’t mean tax-free living. Registered political parties:

✅ Are exempt from:

• Capital Gains Tax (if income would be tax-exempt anyway)

• Donations Tax (when receiving donations)

• Skills Development Levy (if payroll is under R500,000/year)

❌ Still liable for:

• PAYE (Employees’ Tax) – must deduct from staff salaries

• UIF Contributions – unless exempt

• Transfer Duty – on property purchases

• Securities Transfer Tax – on share transfers

• Dividends Tax – on shares held

• VAT – if they meet the VAT registration thresholds.

Bottom line: income tax-free ≠ tax-free entirely.

Can Donors Get Tax Deductions?

No. Political parties are not approved under Section 18A, so any individual or company donating to them cannot claim a tax deduction. Even if the donation is large or recurring, it won’t help with the donor’s tax bill.

What Must Parties Do to Stay Compliant?

Even exempt parties must follow the tax admin rules:

• Submit an annual income tax return (even if there's no tax due)

• Keep financial records for 5 years

• Notify SARS of any changes (address, banking info, office bearers)

• Appoint a representative taxpayer (usually the treasurer or accounting officer)

• Open separate bank accounts for public fund allocations.

Failure to comply could trigger penalties or audits, even if no tax is payable.