A company can deduct Section 18A donations of up to 10% of its taxable income for the year, calculated before the donation deduction. It is a ceiling on income, not on the tax bill. Anything above it is carried forward to the next year, where the same 10% limit applies again.
At a glance — as of September 2026
- The ceiling
- 10% of taxable income, before the section 18A deduction
- Company tax rate
- 27% for years of assessment ending 1 April 2025 to 31 March 2027 (SARS)
- Tax cut at the full ceiling
- 10% of the tax bill, for a company taxed at the flat 27% rate
- Over the ceiling
- Carried forward to the next year, subject to the 10% limit again
- What you need
- A Section 18A receipt from an approved organisation
Is the limit 10% of taxable income or 10% of tax?
It is 10% of taxable income. SARS's guide to Section 18A states that the deduction may not exceed 10% of the taxpayer's taxable income “as calculated before allowing any deduction for donations under section 18A”. Tax owed does not enter the calculation.
The mix-up is common because the two numbers are far apart. At the 27% company rate, the tax bill is 2.7 times the size of the ceiling, so a company reading “10%” against its tax bill gets a ceiling nearly four times too small.
What does that look like in rands?
Take a company taxed at the flat 27% rate that gives the full 10% ceiling. The table works three sizes of taxable income through. The tax saving is 27% of the donation, which is exactly 10% of the original tax bill.
| Taxable income | Tax before giving | 18A ceiling (10%) | Tax saved | Tax after giving |
|---|---|---|---|---|
| R1 000 000 | R270 000 | R100 000 | R27 000 | R243 000 |
| R10 000 000 | R2 700 000 | R1 000 000 | R270 000 | R2 430 000 |
| R100 000 000 | R27 000 000 | R10 000 000 | R2 700 000 | R24 300 000 |
The company still parts with the donation. On the R10 million line, a R1 000 000 gift costs the company R730 000 after the R270 000 tax saving. The rest is money that was heading to SARS either way, now directed by the company.
This table is arithmetic on round figures at a flat 27% rate, as of September 2026. It is not tax advice, and UDRS NPC is not a registered tax practitioner. Your accountant will apply the rules to your actual taxable income, your tax year and any other deductions.
What if you give more than 10%?
Nothing is lost. SARS's guide says any excess disallowed solely because it exceeds the ceiling may be carried forward and is treated as a donation actually made in the next tax year. There it is again limited to 10%, and if some still remains it keeps rolling forward.
A simple case: a company with R1 000 000 of taxable income gives R150 000. It deducts R100 000 this year and carries R50 000 forward. Next year that R50 000 counts alongside any new gifts against the next year's ceiling.
| Step | Amount |
|---|---|
| Donation made this year | R150 000 |
| Ceiling (10% of R1 000 000 taxable income) | R100 000 |
| Deducted this year | R100 000 |
| Carried forward to next year | R50 000 |
Does the 27% rate apply to every donor?
No. 27% is SARS's rate for companies, listed for years of assessment ending from 1 April 2025 to 31 March 2027. Individuals and trusts are taxed on different scales, so the rand saving per rand given differs. The 10% ceiling is the same basis for most donors.
The same SARS guide notes that certain taxpayers, such as real estate investment trusts and resident controlled companies, have a different limit under section 25BB. If that is you, ask your accountant which limit governs.
Interior wall corner and panel joint of a UDRS unit — part of the Kya Sand housing pilot
What do you need to claim it?
A Section 18A receipt from an approved organisation. Section 18A says a deduction is not allowed unless it is supported by a receipt with the prescribed details. Check the receipt when it arrives; our article on what changed on Section 18A certificates from 1 March 2026 lists what it should carry.
Section 18A is a tax deduction. It is separate from B-BBEE scoring, and this article does not cover how a donation is treated under the codes.
Key points
- The Section 18A ceiling is 10% of taxable income, worked out before the deduction, not 10% of the tax bill.
- At the 27% company rate, giving the full ceiling cuts the tax bill by 10%: R2 700 000 on R100 million of taxable income.
- Anything above the ceiling is carried forward and tested against the next year's 10% ceiling.
- You need a valid Section 18A receipt, and your accountant confirms the numbers for your own year.
Frequently asked questions
How much can a company deduct under Section 18A?
Up to 10% of its taxable income for the year, calculated before the donation deduction. That is a limit on income, not on the tax bill, so a company with R10 million of taxable income can deduct up to R1 million.
Is the 10% limit based on my tax bill or my taxable income?
Taxable income. SARS's guide says the deduction may not exceed 10% of the taxable income calculated before any section 18A deduction. At a 27% company rate, giving the full 10% cuts the tax bill by 10%.
What happens if I donate more than 10% of taxable income in one year?
The excess is not lost. It is carried forward and treated as a donation made in the next tax year, where it competes for that year's 10% ceiling. Any excess that still remains keeps rolling forward, always subject to the 10% limit.
What company tax rate should I use to estimate the saving?
SARS lists 27% for companies for years of assessment ending from 1 April 2025 to 31 March 2027. Other taxpayers, such as individuals and trusts, are taxed on different scales, so the saving per rand differs. Your accountant will confirm the rate that applies to you.
Does a Section 18A donation count towards B-BBEE points?
They are separate. Section 18A is a tax deduction under the Income Tax Act; B-BBEE scoring follows its own codes and rules. This article covers the tax deduction only, and we have not verified any B-BBEE treatment here.
Do I need a Section 18A receipt to claim the deduction?
Yes. Section 18A requires the deduction to be supported by a receipt containing the prescribed details. See our article on what changed on Section 18A certificates from 1 March 2026 for the current list.
Thinking of giving as a company?
UDRS NPC is an approved Public Benefit Organisation, PBO 930091096. Our housing work is a pilot in Kya Sand, and costing the repeatable version is the next step. See how corporate giving works, or ask us anything first.
For the full 10% explainer, read the 10% rule on our Section 18A page.
Sources
Checked on 30 September 2026:
- Basic Guide to Section 18A Approval, Issue 5 (SARS, 4 October 2023) — the 10% limit, the “before allowing any deduction” basis, and the carry-forward rule
- Companies, Trusts and Small Business Corporations (SBC) (SARS) — the 27% company rate