The rand
  • South African churches can enjoy substantial tax breaks.
  • Mark Kingon, the acting commissioner of the SA Revenue Service, warns that SARS has church abuses on its radar.
  • Specifically, pastors who use church assets are under scrutinity. 

Once again, the high-flying lifestyles of some South Africa spiritual leaders are under scrutiny. Earlier this month, the Asset Forfeiture Unit attached Pretoria preacher Shepherd Bushiri's private jet (which was reportedly bought in cash) and the Hawks are eyeing his fleet of luxury cars, including a Maserati, a Rolls-Royce, an Aston Martin and a R3 million Mercedes G6.

Unlike other countries such as Rwanda, where pastors are required to have a theology degree before they start their own congregation, churches are not regulated in South Africa.

Still, they can enjoy substantial tax benefits - including no income tax and substantial donation tax breaks - if they are registered as public-benefit organisations with SARS.

Churches' abuses of these tax exemptions are on SARS' radar, says Mark Kingon, the acting commissioner of the SA Revenue Service (SARS).

It is, however, fairly difficult to get the PBO status in the first place, says André Visser, tax lawyer at Adams and Adams, 

He has found that exemptions are more likely to be extended to denominational churches with a long-established leadership and doctrines in place as opposed to mushrooming non-denominational churches.

Some of the biggest abuses are among churches that are run as companies. Kingon says there are questions about whether many of these are legitimate churches.

Where assets of these churches are used for personal reasons, cautions Kingon, pastors and other office bearers need to assume liability for taxes which would arise for using these assets in a personal capacity.

"The questions we should be asking is whether these religious leaders are deriving benefits from the use of cars and other instruments," says Kingon.

SARS is also looking into churches which take donations from congregants, claiming that they are tax free. Only PBO registered with SARS get donation tax breaks.

Visser has noted a worrying trend that congregants donate large sums to churches under the false impression that they will get a tax break. 

The revenue service is still engaging religious institutions and investigating growing tax non-compliance in this sector.

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