Churches be warned… Tito Mboweni’s tax tweet could be very real

CAPE TOWN – Finance Minister Tito Mboweni’s tweet that churches should be taxed has been met with ire by some sectors with the African Transformation Movement (ATM) describing it as irresponsible and controversial.

On Saturday, Minister Mboweni made a tongue-in-cheek comment on Twitter regarding churches. His said: “Any ideas about how to impose taxation on these mushrooming handy clappy, snake eating ‘Churches’? The time to tax them is now!!”

This sparked some reactions with one tweep taking the minister on for not focusing on multinationals avoiding tax “with compliance” and another suggesting that he check businessman Johan Rupert’s taxes after one of his businesses declared a massive profit.

However, Mazars Tax Manager Tertius Troost has a different take on the whole idea of taxing independent churches. He said while this seemed to have been a somewhat humorous take on the state of certain controversial churches, it was also a not-so-subtle signal that the National Treasury really was looking for solutions to ensure these institutions are following the letter of the law.

“In March of last year, then-acting commissioner of the SA Revenue Service (Sars), Mark Kingon, made it clear that Sars would ensure religious institutions – which are usually exempt from tax – are tax-compliant. 

“Now, given recent comments made by Minister of Finance, Tito Mboweni, it seems likely that religious institutions may face even more scrutiny and may even be subject to certain tax amendments in the coming months,” he said.

Troost, however, said he was uncertain whether the Minister was aware of the avenues that were already available to Sars. “Religious institutions are required to register with the Sars tax exemption unit (TEU) as a Public Benefit Organisation (PBO) before it can claim the relief that comes along with being a PBO.”

Troost explained that if the minister was of the opinion that certain churches were not following the rules, there already was a method to investigate and tax these organisations. “On the basis that a church is not registered as a PBO, it would be subject to income tax just like any other company.”

Troost said tax amendments were not necessary, however, the policing thereof might be a better solution. “Sars should make sure that all of the existing tax legislation directed at religious institutions and their employees are followed, and that every one that is liable to pay tax is indeed paying their fair share.”

He said employees who received salaries or fringe benefits such as housing, vehicles or other services as a direct result of their employment from religious institutions, were not exempt from paying tax. “This was made clear by Kingon when he stated that Sars would conduct lifestyle audits on certain employees of religious institutions in order to ascertain whether they are indeed being taxed correctly and that they are not avoiding any legitimate taxes.”

Looking at the churches themselves, Troost said Sars might start by confirming that these religious institutions are in fact registered as PBOs with the TEU.

He said there were also a number of existing regulations that apply to religious institutions. “One of the interesting points to note here is that a PBO cannot pay employees amounts that are deemed to be excessive with regard to what is generally considered to be reasonable in the sector in relation to the service rendered.”

If Sars finds that some church employees are being paid unreasonably high salaries, it could lead to further action being taken and even result in the church losing its status as a PBO, according to Troost.


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