By Al Qalam Reporter
The recent announcement by the South African Revenue Service (SARS) that it plans to scrutinize tax non-compliance amongst religious institutions has prompted the Association of Muslim Accountants & Lawyers (AMAL) to host a workshop to help interested parties ensure that their books are up to date.
AMAL said it plans to convene a workshop soon on the NPOs and PBOs covering Responsibilities of Trustees, Record keeping and Controls, Annual Reporting and other important Statutory Compliance requirements in terms of Nonprofit Organisations Act 71 of 1997, Section 30 of The Income Tax act and PAYE Section 10 (1) (cN) of The Income Tax act.
No date has yet been set for the seminar, but organisations or persons interested in attending should email AMAL: firstname.lastname@example.org to be placed on their invitation list. They can also be contacted on 031-2073381.
Abdul Carrim Khan, Secretary of AMAL told Al Qalam that if organisations are not compliant, it may result in a number of things, such as (a) Deregistration of the organization as an NPO or PBO thus losing this valuable status (b) Criminal prosecution of Organisation and Trustees for con compliance and (c) Obvious consequences in relation to their status amongst donors and their good standing in the Public eye.
Last week, SARS announced that its preliminary investigation established that certain religious organisations and leaders were not complying with tax laws. However, SARS also mentioned that there were many religious institutions that were in fact complying with taxation laws.
According to Fin24.com, SARS plans to raise awareness about the relevant tax obligations of these institutions, the tax authority said.
According to the Income Tax Act, religious institutions may apply for an exemption. But once the tax exemption is granted there are requirements that need to be complied with, according to SARS. These include conducting activities in a non-profit manner with an altruistic or philanthropic intent.
Additionally, the activity should not directly or indirectly promote “economic self-interest” of a person, other than by a “reasonable remuneration” paid for the services rendered.
Religious institutions are prohibited from directly or indirectly distributing funds to any person other than in performing their religious activity, according to SARS.
“SARS is also concerned that proper taxes on trading activities that are unrelated to religious activities as well as Pay As You Earn (PAYE) on remuneration and other benefits are not being paid in terms of legislation,” the statement read.
SARS has also found that a number of religious institutions are issuing tax deductible receipts for donations towards religious activities. “This is not permitted in terms of the Income Tax Act,” SARS said.
SARS called for the entities to use the SARS Voluntary Disclosure Programme to regulate their taxes.