Finance Minister Enoch Godongwana said most allowances paid to members of the executive were fully taxable, but certain exceptions, such as travel allowances and subsistence allowances, were treated preferentially.
Godongwana said members of the executive also received a public office allowance, and 50% of this allowance was taxed monthly via PAYE.
“The full allowance is taxable on assessment when the annual tax return is submitted, unless the member can prove that certain qualifying expenses were incurred and paid (and not recovered from the respective departments), which may reduce the tax liability on assessment,” he said.
Godongwana was responding to parliamentary questions from DA MP Leon Schreiber, who asked whether ministers and deputy ministers were required to pay tax on the range of fringe benefits they received – which included free housing, vehicles, staff, security, electricity, water and flights, in terms of the Ministerial Handbook.
In his reply, Godongwana said taxable benefits were calculated under the Seventh Schedule to the Income Tax Act.
According to Godongwana, ministers and deputy ministers were entitled to state-provided residential accommodation and may be provided with either one or two residences.
“If a member normally resides in his or her own residence, then any residence provided by the state will not attract a taxable value.
“If one residence is provided by the state, and the member relocates and resides at that residence, the member is liable to fringe benefits tax on the rental value.”
However, where two state-owned residences were provided, the member had to be taxed on the property with the highest rental value.
“Any rental payable by a minister for a second residence may be deducted from the taxable rental value calculated under the formula,” he said.
Godongwana said members of the executive were liable for all costs related to a private residence, but when the state paid a member’s private residence utilities bill, a taxable benefit would arise.
“Electricity, water, and other property-related utilities supplied to a member occupying a state-owned residence is included in the rental value of the taxable benefit arising from the use of the accommodation.”
He added that the state did not provide security upgrades to members’ private homes.
“Static security at a private residence is a taxable benefit, the value is the cost to the state.
“Static security at a state-owned residence does not result in a taxable value arising.”
However, close security provided to a member while performing duties of office will not be taxable.
“Use of close security when the member is off duty will be a taxable benefit, the value being the cost to the state of the private cost.”
Godongwana added that state-owned motor vehicles were made available to members of the executive to utilise for official purposes.
“The nature of a member’s duties is such that he or she will perform their duties outside of normal work hours. Private use is infrequent or incidental to business use, and so a no-value rule applies to members, meaning that no taxable amount arises.”
He also said personal staff were provided to members to assist them with their official duties.
Godongwana said official flights were not subject to fringe benefits tax, but private flights were taxable unless a no-value rule applied.
“The no-value rule applies if the flight is for the member’s spouse or minor child, the member is stationed more than 250km from his or her home, is away from home for more than 183 days in a year, and the travel is for between home and the place where the member is stationed,” he added.