Staff author
Paying Zakat? SARS could owe you thousands back
Assalamu Aleikum,
Fulfilling your religious obligation to pay Zakat and Fitr does more than help our community - it can also trigger a substantial tax refund. If you donated to registered Islamic charities this year or even a registered Masjid, you created a tax deduction that SARS likely knows nothing about.
We've written a guide for you below, but if it's still unclear, please use our AI questionnaire or email us at hello@taxclaw.ai or contact us via WhatsApp and we'll help you, insha'Allah.
How it works
Under Section 18A of the Income Tax Act, you can deduct donations to approved charities from your taxable income. Section 18A of the Income Tax Act caps this deduction at 10% of your taxable income for the year. If you calculate your 2.5% Zakat on your wealth and pay it to an approved Public Benefit Organisation (PBO) such as Islamic Relief or potentially your local Masjid, you lower your taxable income for the year. SARS requires the actual certificate to process the claim. A bank statement showing the payment is insufficient. Auto-assessments almost never include these certificates, meaning you must add them manually to get your refund.
Use our AI to maximise your tax refund - we'll sort out SARS
Specific Scenarios
* Scenario 1: The annual Zakat calculation. You calculate your Zakat for the year to be R15,000. You pay this amount via EFT to a registered charity like SANZAF or Islamic Relief. They email you a Section 18A certificate. You add this certificate to your tax return, significantly reducing your taxable income and triggering a refund.
* Scenario 2: Fitr for the family. At the end of Ramadan, you pay Zakat al-Fitr for yourself, your spouse, and your three children to an approved relief organization. Even though the amount is smaller (e.g., R500 total), requesting and submitting that Section 18A certificate still chips away at your tax liability.
* Scenario 3: The monthly Sadaqah. You set up a R500 monthly debit order to a registered disaster relief fund as continuous charity (Sadaqah). At the end of the tax year, the charity issues a consolidated Section 18A certificate for R6,000, which you claim directly against your income.
When you are not eligible
You cannot claim a tax deduction for giving Zakat or Fitr directly in cash to a poor family in your neighborhood. You also cannot claim a deduction if you give the money to a masjid or community initiative that has not explicitly been granted Section 18A approval by SARS.
How to get this tax refund increase, insha'Allah?
Complete TaxClaw’s 5-minute AI questionnaire to review your financial position against your auto-assessment. We’ll help you find ways to increase your refund and can optionally file the correction for you. We also available via email at hello@taxclaw.ai and via WhatsApp by clicking this link
Disclaimer:This article is for informational purposes only and does not constitute financial or tax advice, and is not exhaustive. Tax laws are complex and subject to change. We strongly recommend consulting with our registered tax practitioner to address your specific circumstances.