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Section 8(1)(d) allowance for holders of public offices

24 October 2014   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: We do the tax submissions for numerous Members of Parliament and Legislature. With Parliament members they receive a monthly allowance of Rx which is not included in the income and therefore does not reflect on the IRP 5 certificate. On assessment we can therefore only claim cell phone expenses which exceeded their yearly allowance. The Members of Legislature also receives an allowance, but this allowance is reflected under code 3713 on their IRP 5 certificates. What amount will the Member of Legislature be able to claim against his POB allowance?

A: Our guidance assumes that each of the individuals concerned are a holder of a public office as defined in section 8(1)(e).  

The principle is that cell phone expenses can only be ‘deducted’ if the holder of the public office receives an allowance.  If not section 23(m) will apply.  We are not sure why the allowance does not reflect on the IRP5 and can’t comment on that.  It is possible that section 8(1)(f) is relevant in that instance.  We copied it below: 

"Where it is expected of any person contemplated in paragraph (e) (i) to defray any expenditure referred to in paragraph (d) out of his salary received as the holder of any public office, an amount equal to a portion (which shall be determined by the National Assembly or the President, as the case may be, as provided for in the Remuneration of Public Office Bearers Act, 1998 (Act 20 of 1998)) of such salary shall for the purposes of paragraph (d) be deemed to be an allowance granted to such person.”  In that instance section 23(m) will not apply.  

In all instances the allowance granted to the holder of any public office to enable him or her to defray expenditure incurred by him in connection with such office is for the purposes of section 8(1)(a) deemed to have been expended by him or her to the extent that expenditure relevant to such allowance and not otherwise recoverable by him has actually been incurred by him for the purposes of his office in respect of—

(i) secretarial services, duplicating services, stationery, postage, telephone calls, the hire of office accommodation and the maintenance of such accommodation;

(ii) travelling;

(iii) hospitality extended at any official or civic function which the holder of such office is by reason of the nature of such office normally expected to arrange.  

The emphasis is on the phrase ‘actually incurred …”

Disclaimer: Nothing in this query and answer should be construed as constituting tax advice or a tax opinion. An expert should be consulted for advice based on the facts and circumstances of each transaction/case. Even though great care has been taken to ensure the accuracy of the answer, SAIT do not accept any responsibility for consequences of decisions taken based on this query and answer. It remains your own responsibility to consult the relevant primary resources when taking a decision.



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