How To Register A Church In South Africa

Operating as a church building or religious organisation in South Africa

Southward African law does not currently oblige churches or religious organisations to registeror to have a licencing certificate, in club to operate. Every bit will be explained below however, depending on the type of legal entity within which the church building or religious organisation chooses to arrange itself, and depending too on whether it chooses to operate equally a non-turn a profit organisation (NPO) or public benefit organisation (PBO), it may take to register with unlike departments or agencies of State.

Different types of legal entities

The right to freedom of clan (s 18 of the Constitution) gives persons the right to associate, and grade organisations, in whichever way they cull. The type of legal entity the church or religious organisation chooses, is important because it determines who will be able to conclude contracts on behalf of the organisation, and who will be liable on behalf of the organization if things go wrong. It also enables the organisation to open a bank account in its own name, and gives the organisation credibility with donors. Finally, information technology ensures that the work of the system can comport on by the lifetime of those who originally founded information technology or who are currently involved.

In terms of (current) South African police force, churches and religious organisations typically associate or organise themselves in i of iii ways:

a) Avoluntary association(VA) in terms of the mutual police force:

No registration is required to form a VA – only an agreement between 3 or more than people to attain a common object primarilyotherthan the making of turn a profit (east.one thousand. to meet and worship together as a church building). Annotation that this does not mean that VAs may not receive or brand money. Even so, the business component may not be the primary reason for its existence.
The powers of the VA are determined by agreement – normally by way of a signed Constitution – together with the principles of common police force.
If a party exceeds his/her agreed powers, an interested party tin use for relief to the Loftier Court.

VAs are especially suitable to churches that are member-driven. The members engage (annually, or equally determined in the Constitution) those who govern the organisation (typically in committees), and who will take the powers set up out in the VA'south Constitution.

b) ATrust:

Trusts have to be registered with the Master of the High Courtroom in terms of the Trust Property Command Deed, 1988.
Trusts are discipline to strict governance to ensure that the trustees human activity in accordance with the letters of authorization and trust human activity drawn up by the founder during his/her lifetime. These oblige them to remain focused on achieving the stated public benefit objectives of the Trust.
The Act provides for the removal of trustees by the Main or the Court, in the upshot of a trustee'southward failure to perform his/ her duties.

While trusts are not particularly suitable to churches (that are often member-driven), they are well suited to donor organisations that are more vision-/acme-driven by a board of trustees, due east.one thousand. trusts set up upwardly to raise funds for a ministry to the poor.

c) Anon-turn a profit visitor (NPC) (previously known as a "department 21 visitor"):

NPCs have to be registered with the Companies and Intellectual Properties Commission (CIPC) in Pretoria, in terms of the Companies Act, 2008.
NPCs, likewise, are bailiwick to strict governance to ensure that members and directors practice not benefit from NPC income or surpluses. They must also remain focused on achieving the stated public benefit objective as fix out in the NPC'due south Memorandum of Incorporation (MOI). Again, this does not mean that NPCs may not brand any profit, simply merely that any profits made may not be shared out between members/directors/employees. Rather, they must be retained by the NPC and used in pursuit of its main object or invested for the aforementioned purpose.
The Act also provides for criminal sanctions (and possible personal liability) in the event of not-compliance with the Act.

Churches or religious organisations sometimes cull to register every bit NPCs which, because of the processes and requirements set out in the Companies Act, offering donors and other stakeholders a greater degree of condolement than VAs and trusts.

Voluntary registration as a non-profit organization (NPO)

All of the to a higher place legal entities tin (only arenot obliged to) register as a non-turn a profit organisation (NPO) with the Department of Social Development (DSD) in terms of the Not-Profit System Act, 1997.

Information technology should exist noted that at that place is a difference between a not-governmental organisation (NGO) and a non-profit organisation (NPO). NGOs commonly refer to organisations that are not role of regime, whether or not they have been formally registered, whereas as a NPO is a NGO that is registered with DSD in terms of the NPO Deed.

The reason why many religious institutions choose to register as NPOs, is because NPO registration is a requirement for most donor and funding agencies, and association with a regime agency does lend credibility to an organisation.

The NPO Act already has very specific requirements for religious organisations who desire to register as NPOs, including the submission of a constitution; keeping bookkeeping records; regular submission of fiscal statements, and narrative reports of the organisation'due south activities and part bearers (as well as whatever changes thereto). These reporting requirements ensure a level of accountability as well every bit giving a sense of comfort to donors that the NPO is operating within the premises of the law and that it maintains certain minimum standards of good governance.

In the event of non-compliance, DSD may cancel the NPO's registration as such and, in certain circumstances, refer the NPO to the Police for criminal investigation. The NPO annals is open to the public, and all documentation lodged available for public inspection.

Finally, information technology is of import to note that NPO registration is completely separate to registration every bit a PBO (which will be explained below). In other words, NPO status doesnon likewise give you PBO (or tax-exempt) status. To accept taxation exemption, you need to employ separately to SARS (as explained below).

Information technology is likewise no longer a requirement that an organisation register nether the NPO Act in order to qualify for PBO approval. Yet, if an organisation commits an offence nether the NPO Human activity, SARS may withdraw the organisation's PBO approval.

Voluntary registration as a public benefit arrangement (PBO)

A VA, Trust or NPC can (but isnon legally obliged to) register equally a public benefit organisation (PBO) with SARS in terms of the Income Revenue enhancement Act, 1962. Information technology is important to notation that tax exemption for churches and religious organisations is thereforenot automatic. Information technology has to exist applied for through SARS' tax exemption unit.

According to the SARS website, NGOs "play a significant role in society every bit they take a shared responsibleness with government for the social and development needs of the country. Preferential tax treatment is designed to assist non-turn a profit organisations past augmenting their fiscal resources".

The most important reason for NGOs to be tax exempt, is that donors require it – either because the donor itself is a tax-exempt entity, or the donor's policy (from an accountability signal of view, and to ensure that funds are just used for the purpose outlined in the recipient system's founding document) is exclusively to give money to revenue enhancement-exempt entities.

However, more practically, if an organisation is not registered as a PBO, the donor will need to pay a donation tax on any donated funds over and to a higher place R100,000 a yr and the recipient organisation volition need to pay income tax on funds received (or the individual receiving the funds if it is indeed a false organisation). Notwithstanding, if the organisation is a (registered, tax-exempt) PBO, no donations tax will be payable.

Further, it is oft assumed that considering an organisation is revenue enhancement-exempt, it as well has the power to upshot tax-deduction certificates to their donors under s 18A of the Income Taxation Act. This is wrong: revenue enhancement exemption and south 18A arenon the same. Without going into swell item here, in gild to authorize for southward 18A tax-exempt status, an organisation's founding document needs to include a articulate objective that is aligned with the canonical public do good activities that are outlined in the Ninth Schedule of the Income Revenue enhancement Human action. There are a range of weather to receiving this status, including a requirement that PBOs cannot (straight or indirectly) utilize their resource to support a political party.

It is important to notation that information technology isnot right that PBOs are not allowed to make whatever profit at all. The Income Tax Act does let a certain threshold profit for PBOs. Where a PBO operates as a business and makes profit over and to a higher place the allowable threshold (and/or does not pay taxation on this income), SARS has both the ability and the responsibility to accept activity.

Finally, information technology is important to note that the law requires that both the NPO registration number and the PBO number appear on any public documentation or data of the religious establishment, eastward.g. letterheads and websites.

References:

Nicole Copley,NGO Matters: A applied legal guide to starting upwardly, Juta (1^stedition, 2017).
Shelagh Gastrow,Donating to a public benefit system: what it means, in Daily Maverick, 27 March 2018.
Ricardo Wyngaard, NGO Matters: Governance for non-turn a profit boards, Juta (1^st edition,2017).

For more information please contact FOR SA at info@forsa.org.za or visit their website http://forsa.org.za