* This article is published here with the permission of Hekima Consulting as the original author and publisher.
You may have heard comments made by the Finance Minister on how he has urged the SARS Commissioner to tighten laws regulating churches.
In the article, Tax Commissioner mentioned that a lot of churches were not compliant with PAYE/UIF as well as donations made to Pastors.
This article is designed to assist you with the basics that you need to know with regards to the 2 taxes.
- If a church employs at least one person R6,583/month or R79,000/year – the church must register as an employer with SARS – this is essentially registering for PAYE/UIF.
- The employee is then listed under the church e.g. a Pastor will be listed as the employee.
- In this case, the Pastor would not need to register for personal income tax as the church will register him/her as an employee with SARS. (Refer to the previous email on Personal Income Tax for details on this tax).
- The church is required to submit a PAYE/UIF return (EMP201) on a monthly basis to SARS.
- Submission of EMP201 should be accompanied by a payment to SARS of the PAYE/UIF due.
- The submission should be done by the 7th day of the following month.
- The church is required to register for PAYE/UIF even if it is tax-exempt i.e. PBO.
NOTE: If you are unsure how to calculate PAYE/UIF and do not wish to go to a branch for help you can use automated software, SimplePay – https://www.simplepay.co.za/cost (They charge per employee)
We recommend them to all our clients – it is an amazing tool.
- DONATIONS TAX – donation made to a Church and/or Pastors
This is a tax paid by the donor to SARS levied at 20% and 25% for donations more than R30million, subject to certain exemptions.
- Donations made to a public-benefit organization are exempt from donations tax e.g. tithes and offerings.
- It’s important to note, however, that churches do not qualify to issue donor certificates (s18A certificates) – this means that a member donating to the church cannot claim a deduction from SARS.
- A donation made to a Pastor is subject to donations tax in the hands of the donor, e.g. church member. For example, if a member buys a Pastor a car – this is regarded as a donation and the member is liable to pay donations tax at either 20% of the value of the car.
- Donations tax should be paid within 30 days after the donation was made.
- Declaration of donations tax can be submitted on SARS eFiling:
- (i) The first R100,000 is, however, exempt – this means that if the car was R96,000 the member would not be liable to pay donations tax as the value is under R100,000.
- (ii) If the car was worth R250,000, for example, and the member fails to pay – both the donor (Member) and donee (Pastor) will be jointly and severally liable to pay donations tax – this means SARS may issue a tax assessment to the Pastor even though the Pastor was the receiver of the donation.
- (iii) In cases where the above occurs, the obligation will be lifted if any one of the parties pays the tax.
Pinda Ndamase CA(SA)
061 544 4978
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