Q: I have a
client who is a pastor of a local church. He does not receive an income, but
the church pays for all his travelling expenses, him and his wife's pension
fund, UIF contribution and PAYE. He also lives in the church house for free and
the church also pays for his water and electricity expenses. How should he be
taxed on all these items?
A: We assume
there is an employer employee relationship between the pastor and the church.
In such instance all the taxable benefits such as accommodation and travel
should be taxed under the provisions of the Seventh Schedule ITA. If the travel
is payment of petrol and maintenance of a private vehicle this will be a travel
allowance for tax purposes. The payment of the pastors PAYE & employee UIF
will be a taxable benefit (para 7 if a car is provided and para 9 for the accommodation)
unless the remuneration of the pastor is grossed up so that the PAYE reflects
the amount that would have been withheld. Where only benefits and no cash flows
as per the current facts the gross up would have to be done so that sufficient
cash to pay the PAYE results, essentially a cash payment would have to be
disclosed as accruing. The pension fund for the employee would be treated under
the normal rules.
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.
Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.
MINIMUM REQUIREMENTS TO REGISTER
The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.