The City of Cape Town is proposing 11 new property rating categories to allow for either lower or no rates to be charged for NPOs and other charitable property owners, including organisations offering shelter for street people, early childhood development and youth. These categories are meant to be added on July 1st, 2020.
Public Benefit Organisations (PBOs) and Nonprofit Organisations (NPOs) registered either as a Trust, Nonprofit Company or Volunteer Association, are critical to the very fabric of our communities, where they provide essential services. There is no more apparent proof of this than in the current pandemic with the COVID-19 crisis.
On July 1st, 2019, due to national changes in legislation involving Amendments to the Local Government Municipal Property Rates, many NPOs and PBOs which could previously qualify for property rates rebates, found themselves unexpectedly short of cashflow and no longer able to access this assistance. For some, this meant an immediate increase in rates of almost 90% with little or no forewarning. In some cases, announcement letters were received after the scheduled City information session had been conducted.
As a relief measure, the City of Cape Town attempted to fill this gap by encouraging these affected organisations to apply for the existing grant-in-aid funds. However, fitting into this requirement was not always a direct conversion in activities and in some cases no feedback of success (or lack thereof) regarding funding was provided.
Another option was for registered PBOs to now fill in an application form to change their rating category, which could provide a rates relief of 75%. However, one of the requirements was to obtain a tax exemption letter not older than three months from SARS, the latter of which could take over eight months to obtain. The tax-exempt letter needed to specify that the entity is a PBO and aligned with either item 1 (welfare and humanitarian), 2 (healthcare), or 4 (education and development) of Part 1 of the Ninth Schedule of the Income Tax Act, specifications that are not necessarily spelled out in currently issued tax-exempt letters.
With the above options having uncertain success and critical timeline delays, the announcement of new rates rebate categories having a reduced or no property rates rating is most welcome. Although this does not fix the problem of NPOs that have been bleeding over the past several months, paying higher rates while these funds could have gone towards fulfilling their public benefit activities, it is understood that the amendment to the national legislation was outside of the City of Cape Town’s control.
The 11 new property categories (which are in addition to the existing rating categories, one of which is Public Benefit Organisations used for Specified Public Benefit Activities), include:
• Cemeteries and crematoria
• Properties owned by not for profit organisations and used for animal shelters
• Properties owned by not for profit organisations and used as an early childhood development facility
• Properties owned by not for profit organisations and used for youth development
• Properties owned by not for profit organisations and used for street people shelters
• Properties owned by not for profit organisations and used as a local community museum
• Properties owned by not for profit organisations and used for an old age home
• Properties owned by not for profits organisations and used exclusively for amateur sport
• Properties owned by a Social Housing Regulatory Authority-accredited Social Housing Institution and used for social housing
• Properties owned by war veterans’ associations and used for the welfare of war veterans
• Nature conservation land.
The release states that interested and affected parties and members of the public are asked to have a look and comment as part of the City’s 2020/21 Draft Budget public participation process.
To view the Draft Budget and Draft Rates Policy please visit https://bit.ly/2Ul5Pvm
Source: City of Cape Town website Media Release;