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What kind of tax are religious institutions required to pay?

Acting Sars commissioner oMark Kingon says a study conducted a year ago reveals how a number of churches are 'incorrectly declaring'.

Picture: Supplied

JOHANNESBURG - The South African Revenue Services (Sars) says while it is not targeting spiritual leaders and churches are exempt from tax, they are subject to tax on their trading income and salaries, which is not happening in some cases.

Acting Sars commissioner Mark Kingon says a study conducted a year ago reveals how a number of churches are 'incorrectly declaring'.

He explains how a religious institution can, however, qualify as a public benefit organisation (PBO) with benefits.

"Tithes which are donations, that would be exempt from tax in the hands of the church, but as soon as the church uses those tithes to pay a salary to one of the workers within the religious entity, that becomes taxable for pay-as-you-earn purposes."

"The tithes are exempt and that is always going to be the problem in any entity that receives cash donations. If we are in doubt, we will probably do a capital reconciliation - in other words, a lifestyle audit. Those are the types of checks and balances we would have in place."

Listen to the audio below for more.