South African churches may soon be taxed, Finance Minister warns

South African churches may soon be taxed, Finance Minister warns February 28, 2020

THE South African Government is promising a clampdown on ‘men of the cloth’ who getting enormously rich by avoiding taxation and engaging in other dodgy money-making activities.

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Finance Minister Tito Mbowen, above, said at  a pre-budget speech press briefing on Wednesday that  the government could no longer afford to sit back and watch certain preachers add church leaders flaunt their wealth while they found creative ways of evading tax.

Have you seen them? They feed people snake and grass and they walk on people, they do all kinds of crazy things in the name of God. And then you see them displaying wealth … and they are not paying tax, these fellows. Some of them have private jets, and so on all in the name of God.

Mboweni said he had mandated tax experts within the National Treasury and the tax service Sars to tighten up the country’s laws governing the tax affairs of religious public-benefit organisations such as churches

They said they are already paying tax, I said, ‘where?’

Mboweni said churches were mushrooming everywhere; the congregants were paying contributions but the church leaders did not pay taxes. He warned that this kind of lawlessness would bring the country down.

He then joked:

I know I am going to get into trouble about this. The President will probably call me into his office and say, ‘what did you say about that thing’, and then I will tweet about it later.

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South African Revenue Service (SARS) Commissioner Edward Kieswetter, above, said that in terms of the current tax regime, churches were classified as public benefit organisations and were exempt from paying income tax.

But Kieswetter said most church organisations were not registering their employees for pay-as-you-earn (PAYE), among other tax obligations they were not meeting, including the non-payment of VAT.

Where the abuse takes place is that when they employ anyone, those employees are subject to PAYE on their income. They are not exempt from that.

If they are not exempted by Sars, the organisations have to also pay VAT on goods and services that they get.

The salary of the president of the public benefit organisations, or the pastor if it’s a religious organisation, has to run all of his income through the normal ‘in the services you rendered provision’ and cannot, for example, have a car as a benefit that doesn’t reflect as income, or a big house or a plane that doesn’t reflect as an income.

To the extent that it is donated, it must have a donation’s tax certificate from the person who gives it, so you can’t get out of the tax loop.

Kieswetter said many of these organisations conflated the public benefits activity for which they are issued a certificate with other taxable activities.

We have this year begun to raise quite a number of assessments through our audit work on such organisations and we will step up that work.

A 2017 report by the Cultural, Religious and Linguistic Rights Commission found that many churches were neither registered with the Department of Social Development (DSD) nor Sars as public benefit organisations. It also found that some of the churches did not submit annual reports to the DSD and  did not disclose the amounts they made per year.

The report also found that in many places of worship, money collected from members was sometimes deposited in the personal accounts of spiritual leaders. In some cases, such accounts were held in foreign countries. The implicated religious leaders, the report found, did not apply to the Reserve Bank for permission before repatriating money out of the country.

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One prosperity gospel preacher that the authorities may well have in their sights is “Professor” Lesego Daniel, of the Rabboni Centre Ministries. He known for making his followers to chow down on stuff such as grass and live millipedes.

Hat tip: Paul Duveen and BarrieJohn (Lesego Daniel report)


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