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Re: Company for DC16 - some research



Hi Bernelle (2015.07.02_15:08:35_+0200)
> Registering as a company is best (not as a trust, for example).

I was assuming that, too. Probably an NPO.

> He explained the difference between sponsor and donation:
> Donation is gratuitous disposition, and taxed at 40% (I think, but it is
> taxed).

It seems the rate is 20%.
http://www.sars.gov.za/TaxTypes/DonationsTax/Pages/default.aspx

> Sponsor is like a transaction, where both parties receive benefit. This is
> counted as income, and taxed (the sponsor is taxed), but the amount of tax
> depends on the turnover of the company.

Right, so nobody will actually be donating to us. They'll be sponsoring.
There'll be no tax benefit for them, because we aren't a PBO, and we'll
have taxable income. Is that correct?

However, they should be able to claim the sponsorship as a business
expense, which can offset tax for them. I think?

> *IF we can make sure that the local funds remain at an annual turnover of
> less than R1 million, then we qualify for registering as a Micro Business,
> which means we only have to pay around 3% tax [1]. *So, only manage the
> local sponsors in the local company, and use international sponsors to pay
> international costs (e.g. flights), as far as possible.

I think this is doable. IIRC we're looking at about half a million for
the venue, and the rest of the costs will be nowhere close to that.
But we need our budget to advance a bit, to tell that.

Is this something we need to be sure of, in advance? Or is it just
relevant to tax filing, the next year?

> The next steps would be to draft the founding documents, draw up a
> memorandum of agreement, register the company (at CIPC [2]), and then apply
> to SARS, the South African Revenue Service.
> 
> He says this is all pretty straightforward, and there is no problem
> creating and then dissolving a company.

What's the timing on this? What are the costs associated, for us? Or
were they offering this pro bono?

> For what it's worth, PBO's qualify for tax-deductible donations for the
> sponsors [3], so that would be nice. But he is adamant we don't apply, and

Yeah, I think Debian could fit in the Research category of Section 30.
And we're a conference for Debian, held at a University.
But there are no Section 18A categories that our sponsorship would fit
within. It wouldn't grant a tax benefit to the sponsor.

I think I got this advice before, too. That PBO was out of our reach,
especially in our timeframe.

SR

-- 
Stefano Rivera
  http://tumbleweed.org.za/
  +1 415 683 3272


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