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Zuma Not Exempt from Tax on Nkandla

Wednesday, 15 January 2014   (0 Comments)
Posted by: Author: Antoinette Slabbert
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Author: Antoinette Slabbert (Moneyweb)

Exemption for national key points doesn’t apply, but work-related expenses exempt.

An exemption in the Income Tax Act for security expenditure at national key points is not going to help President Jacob Zuma to avoid paying taxes on expenditure at his Nkandla residence.

There are however other arguments he can put forward to avoid paying more than R80million fringe benefit tax on the upgrades said to total R206 million.

On the face of it Zuma can invoke section 24D of the Income Tax Act. It allows a taxpayer to deduct security related costs at national key points for tax purposes.  Nkandla has reportedly been declared a national key point. The expenditure was however done by government and not by Zuma himself.

A tax practitioner who asked not to be named says even though an employee did not incur the costs himself, costs incurred by an employer that the employee is being taxed on, are in some instances considered as costs incurred by the employee.

He says that in terms of section 23(m) a natural person can however not make a deduction against remuneration income in respect of certain expenses such as those relating to national key points.

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