Overview of Taxation of Members of...

Overview of Taxation of Overview of Taxation of

Members of ParliamentMembers of Parliament

GROSS INCOME

EXEMPTIONS

Tax Structure: The Reduction Formula

DEDUCTIONS

TAXABLE INCOME

GROSS INCOME

EXEMPTIONS

DEDUCTIONS

�� Employment incomeEmployment income

�� Retirement incomeRetirement income

�� Passive incomePassive income

�� Business incomeBusiness income

Gross Income

DEDUCTIONS

TAXABLE INCOME

GROSS INCOME

EXEMPTIONS

DEDUCTIONS

�� Interest and dividendsInterest and dividends

Exemptions

DEDUCTIONS

TAXABLE INCOME

GROSS INCOME

EXEMPTIONS

DEDUCTIONS

�� Pension fund contributionsPension fund contributions

�� RAF contributionsRAF contributions

�� Income Protection PolicyIncome Protection Policy

�� Medical expensesMedical expenses

Deductions

DEDUCTIONS

TAXABLE INCOME

�� Business expenses Business expenses

against travel allowanceagainst travel allowance

�� Official expenses against Official expenses against

public office allowancepublic office allowance

� Tax deducted on 80% of the allowance or 20% of the

allowance if employer satisfied that business use will

be 80% for the tax year.

� Travel reimbursement at a rate per km (official

travelling) – not subject to PAYE monthly but added

to the fixed travel allowance on assessment.

Travel Allowance

� On assessment, if-

� No claims made against the allowance – a tax liability will

arise in respect of the 20% of the allowance;

� 20% utilisation of the allowance – no liability will arise;

� Full utilisation or utilisation more than 20% of allowance –

result in credit.

No claims substantiated:

Travel Allowance R100 000

Expenditure R 0

Taxable income on assessment R100 000

Tax on assessment (35%) R 35 000

Example: 80% subject to PAYE

PAYE on 80% of allowance R 28 000

Liability on assessment R 7 000

Full utilisation of allowance:

Travel Allowance R100 000

Expenditure R100 000

Taxable income on assessment R 0

Tax on assessment (35%) R 0

Example: 80% subject to PAYE

Tax on assessment (35%) R 0

PAYE on 80% of allowance R 28 000

Credit on assessment R 28 000

� Currently R120 000 p.a.

� Paid to cover the cost of certain expenditure

incurred by a Public Office Bearer in connection

with the duties of his or her Office

Public Office Allowance

with the duties of his or her Office

� 50% of allowance is subject to PAYE - monthly

� On assessment, if-

� No claims against the allowance – tax liability will

arise in respect of 50% of the allowance not subject

to tax on the monthly basis;

� 50% utilisation of allowance – no tax liability on

Public Office Allowance

� 50% utilisation of allowance – no tax liability on

allowance will arise;

� Full utilisation of allowance – PAYE on the 50% of the

allowance taxed will create a credit.

50% utilisation of allowance:

Public Office Allowance R120 000

Expenditure R 60 000

Taxable income on assessment R 60 000

Tax on assessment (35%) R 21 000

Example

Tax on assessment (35%) R 21 000

PAYE on 50% of allowance R 21 000

Liability on assessment R 0

Expenditure in the course of the duties connected to the

holding of Public Office:

� Subsistence of R276 per day (for meals and accidentals costs) away from

home or R85 for incidental costs only.

� Secretarial fees

Public Office Allowance: Allowable Claims

� Stationery, postage and duplicating costs

� Telephone not reimbursed by Parliament

� Hire & maintenance of an office

� Hire of vehicles not reimbursed by Parliament

In order to claim against the

allowance you will need to keep

the following records:

Importance of Record Keeping

Where you travel away from home on official business an

amount of R276 per day may be claimed for meals and

incidental expenditure.

Provide a schedule showing:

Subsistence Allowance

Provide a schedule showing:

� Dates away from home

� Destination

� Reason for trip

� Documentary proof of any

amount paid to an agency

� In the case of an individual:

� Full names

Secretarial Services

� Full names

� Residential address

� Identity number

� Description of duties

� Amount of time on duties

� Where duties are carried out

� Amount paid

A schedule of amounts claimed.

Documentary evidence must

Stationery, Postage and Photocopies

Documentary evidence must

be available on request.

� Statement of full accounts for telephone, mobile and fax.

� Amounts reimbursed by Parliament.

� Statement declaring percentage of private use.

Telephone

Documentary evidence must

be available upon request.

Only amounts not

reimbursed will be allowed.

� This may not be a party office but a constituency office

and may not be situated in the members home.

� The following information must be provided:

Hire and Maintenance of Office

� Address of the office

� Name of entity to whom rental is paid

� Details of amount claimed

Documentary evidence must

be available on request

� This could include toll or parking

fees, driver’s salary, taxes or hire of

vehicles.

� Records to be provided:

Use of Hired Vehicles

� Schedule showing expense claim

� Driver’s salaries – name and ID no

� Car hire – documentary proof &

reason for hire

Further Information and Assistance

Name Position Phone Email Mobile VIP Unit

Ms BL Ferguson Team Leader 021-464 6181 bferguson@sars.gov.za 083 555 4543 Cape Town

Ms CM Morgan Consultant 021-464 6172 cmorgan@sars.gov.za 083 555 4497 Cape Town

Ms ZS Wicomb Consultant 021-464 6182 zwicomb@sars.gov.za 082 413 8870 Cape TownMs ZS Wicomb Consultant 021-464 6182 zwicomb@sars.gov.za 082 413 8870 Cape Town

Ms VP Dinwayo Team Leader 012-422 5107 vdinwayo@sars.gov.za 083 300 0108 Pretoria

Ms MS Alberts Consultant 012-422 5106 malberts1@sars.gov.za Pretoria