{"id":701617,"date":"2023-07-05T16:00:00","date_gmt":"2023-07-05T14:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=701617"},"modified":"2023-07-05T15:56:11","modified_gmt":"2023-07-05T13:56:11","slug":"south-africas-millionaire-ministers-enjoy-r3-billion-in-vip-security-tax-free","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/trending\/701617\/south-africas-millionaire-ministers-enjoy-r3-billion-in-vip-security-tax-free\/","title":{"rendered":"South Africa&#8217;s millionaire ministers enjoy R3 billion in VIP security &#8211; tax free"},"content":{"rendered":"\n<p>The South African government spends more money protecting VIP millionaire ministers and politicians than it does on policing services for serious crime.<\/p>\n\n\n\n<p>According to civil action group Outa, for the 2023\/24 financial year, taxpayers are financing just under R3.4 billion worth of VIP protection and static protection for politicians, while the Hawks have received a budget of only R2.25 billion to investigate serious crimes in the country.<\/p>\n\n\n\n<p>This has been a recurring trend, with VIP protection outweighing serious crime prevention for the last two financial years.<\/p>\n\n\n\n<blockquote class=\"twitter-tweet\"><p lang=\"en\" dir=\"ltr\">It seems <a href=\"https:\/\/twitter.com\/hashtag\/politicians?src=hash&amp;ref_src=twsrc%5Etfw\">#politicians<\/a> are really scared of us, the ordinary citizens. Look how much taxpayers are coughing up to protect them (R3,378bn) versus what the <a href=\"https:\/\/twitter.com\/SAPoliceService?ref_src=twsrc%5Etfw\">@SAPoliceService<\/a> gets to protect us (R2,247bn). What do you fear <a href=\"https:\/\/twitter.com\/GovernmentZA?ref_src=twsrc%5Etfw\">@GovernmentZA<\/a>, <a href=\"https:\/\/twitter.com\/PresidencyZA?ref_src=twsrc%5Etfw\">@PresidencyZA<\/a> <a href=\"https:\/\/twitter.com\/PaulMashatile?ref_src=twsrc%5Etfw\">@PaulMashatile<\/a> <a href=\"https:\/\/twitter.com\/ParliamentofRSA?ref_src=twsrc%5Etfw\">@ParliamentofRSA<\/a>? <a href=\"https:\/\/t.co\/mGbf2qtC0y\">pic.twitter.com\/mGbf2qtC0y<\/a><\/p>&mdash; OUTA (@OUTASA) <a href=\"https:\/\/twitter.com\/OUTASA\/status\/1676584811325014016?ref_src=twsrc%5Etfw\">July 5, 2023<\/a><\/blockquote> <script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n\n\n\n<p>And while everyday South Africans have to take money out of their disposable (after tax) income to enjoy the protection of private security just to feel safe in their own homes &#8211; politicians get to enjoy their VIP protection services tax-free.<\/p>\n\n\n\n<p>In response to a parliamentary Q&amp;A, finance minister Enoch Godongwana revealed that the benefits provided to ministers under the Guide for Members of the Executive (Ministerial Handbook) &#8211; which includes VIP services &#8211; are given tax-free when used in the fulfilment of government duties.<\/p>\n\n\n\n<p>The minister noted that the perks can be taxable, but it depends on the circumstances. <\/p>\n\n\n\n<p>Broadly, if a benefit serves a purpose to the minister while they conduct official business or in the execution of their duties, they are not liable for any tax. <\/p>\n\n\n\n<p>However, if the benefit serves them in their private capacity or while they are off-duty, it becomes taxable, with the taxable amount being the cost to the state.<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Tax-free perks<\/strong><\/p>\n\n\n\n<p>The <a rel=\"noreferrer noopener\" href=\"https:\/\/www.gov.za\/sites\/default\/files\/gcis_document\/201912\/guide-members-executive.pdf\" target=\"_blank\">Ministerial Handbook<\/a> is a guide to the \u2018benefits and privileges that members of the cabinet are entitled to \u2013 including free housing, vehicles, staff, security, electricity, water, and air travel.<\/p>\n\n\n\n<p>These perks are over and above the\u00a0salaries\u00a0ministers and deputy ministers draw, which is\u00a0between R2 million and R2.5 million\u00a0annually.<\/p>\n\n\n\n<p>During parliamentary Q&amp;A, Godongwana was asked whether ministers and deputy ministers are required to pay tax on the vast range of fringe benefits they receive under the Guide for Members of the Executive.<\/p>\n\n\n\n<p>In response, Godongwana explained that taxable (fringe) benefits are calculated under the Seventh Schedule to the Income Tax Act.<\/p>\n\n\n\n<p>&#8220;The legislation makes provision for which benefits are taxable, how the value of the taxable benefit must be calculated, and circumstances when no value is placed on a particular benefit,&#8221; he said.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><a  data-lightbox=\"post-image\" href=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2023\/07\/Godongwana.jpg\"><img loading=\"lazy\" decoding=\"async\" width=\"1000\" height=\"703\" src=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2023\/07\/Godongwana.jpg\" alt=\"\" class=\"wp-image-701641\" srcset=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2023\/07\/Godongwana.jpg 1000w, https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2023\/07\/Godongwana-300x211.jpg 300w, https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2023\/07\/Godongwana-768x540.jpg 768w\" sizes=\"auto, (max-width: 1000px) 100vw, 1000px\" \/><\/a><figcaption class=\"wp-element-caption\">Minister of Finance Enoch Godongwana <\/figcaption><\/figure>\n\n\n\n<p>However, Godongwana added that the South African Revenue Service (SARS) accepts that ministers and deputy ministers (members) <strong>generally utilise these benefits as prescribed in the Ministerial Handbook and are often not taxed. <\/strong><\/p>\n\n\n\n<p>Despite this, he provided the circumstances when a member is taxed and not taxed on the benefits as granted under the Guide for Members of the Executive, which are listed below as outlined by Godongwana.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Security <\/strong><\/p>\n\n\n\n<p>According to Godongwana, the state does not provide security upgrades to members\u2019 private homes, so no tax consequences arise.<\/p>\n\n\n\n<p>Any security upgrades effected at state-owned residences accrue to the state, not the member occupying the premises, so no taxable benefit arises.<\/p>\n\n\n\n<p>Static security is provided to members at private residences designated as \u201cofficial\u201d and state-owned homes.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Static security at a private residence is a taxable benefit; <\/strong>the value is the cost to the state.<\/li>\n\n\n\n<li><strong>Static security at a state-owned residence does not result in a taxable value arising<\/strong>.<\/li>\n<\/ul>\n\n\n\n<p>Close security (body guards and VIP services) provided to a member whilst in the course of performing duties of office will not be taxable. However, the use of close security when the member is off duty will be a taxable benefit, the value being the cost to the state.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Housing <\/strong><\/p>\n\n\n\n<p>Ministers and deputy ministers are entitled to state-provided residential accommodation. They may be provided with one or two residences (one per seat of office). According to Godongwana:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>If a member normally resides in their own residence, then any home the state provides will not attract a taxable value (no value).<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>If the state provides one residence, and the member relocates and resides there, the member <strong>is liable to fringe benefits tax on the rental value.<\/strong> The rental value is calculated using a formula linked to the member\u2019s remuneration.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Where two state-owned residences are provided, the member must be taxed on the property with the highest rental value.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Any rental payable by a minister for a second residence may be deducted from the taxable rental value calculated under the formula.<\/li>\n<\/ul>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Electricity and Water<\/strong><\/p>\n\n\n\n<p>The Ministerial Handbook provides that members are liable for all costs related to a private residence. However, <strong>should the state pay a member\u2019s private residence utility bill, a taxable benefit would arise<\/strong>, said Godongwana.<\/p>\n\n\n\n<p>Electricity, water, and other property-related utilities supplied to a member occupying a state-owned residence are included in the rental value of the taxable benefit arising from the use of the accommodation, as referenced above.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Vehicles<\/strong><\/p>\n\n\n\n<p>Godongwana said state-owned motor vehicles are available to members for official purposes only. According to the Handbook, members are entitled to four luxury vehicles each (two per province).<\/p>\n\n\n\n<p>The nature of a member\u2019s duties is such that they will perform their duties outside of regular work hours. Private use is infrequent or incidental to business use, so a no-value rule applies to members, meaning <strong>no taxable amount arises.<\/strong><\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Domestic and international flights<\/strong><\/p>\n\n\n\n<p><strong>Official flights are not subject to fringe benefits tax<\/strong>. Private flights are taxable unless a no-value rule applies. <\/p>\n\n\n\n<p><strong>The no-value rule applies if the flight is for the member\u2019s spouse or minor child<\/strong> and the member is stationed more than 250kms from their home or away from home for more than 183 days in a year, meaning the travel is only used for between home and the place where the member is stationed.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong>Read: <a href=\"https:\/\/businesstech.co.za\/news\/government\/700711\/ramaphosa-grants-millionaire-ministers-a-3-salary-increase\/\">Ramaphosa grants millionaire ministers a 3% salary increase<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>While the majority of benefits outlined in South Africa&#8217;s Ministerial Handbook are typically tax-exempt, there may be certain situations in which they become taxable.<\/p>\n","protected":false},"author":10,"featured_media":647121,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-701617","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-trending"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/701617","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=701617"}],"version-history":[{"count":4,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/701617\/revisions"}],"predecessor-version":[{"id":701683,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/701617\/revisions\/701683"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/647121"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=701617"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=701617"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=701617"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}