Johannesburg — New regulations will force religious bodies to disclose their financial assets and how much their ministers are paid

THE South African taxman now has the wealth of the country's churches in his sights.

The South African Revenue Services is trying to prevent churches from abusing their tax-exempt status and paying their ministers "excessively" by forcing them to:

Publicly declare their finances if they want to remain tax-exempt;

File annual financial statements;

Stop paying their ministers "excessive compensation" and instead pay them a market-related wage;

Stop setting up businesses which generate more than 15% or R25 000 of their annual gross income, and investing in privatecompanies; and

Stop setting up businesses that are in direct competition with companies that don't have tax-exempt status.

The move is expected to affect mainly independent churches, such as the Zion Christian Church, Rhema Bible Church and Shembe.

These churches are believed to be worth hundreds of millions of rands - and their pastors and founders to be paid millions - but their assets have remained hidden because they do not have to declare their earnings.

One pastor, Frederick Samuel Modise - who founded the 1.5-million strong International Pentecostal Church - was known to have a fleet of cars which included Rolls-Royces, Cadillacs, a Bentley and four top-of-the-range Mercedes-Benzes.

Mainline churches such as the Methodist Church, which has confirmed its worth as R2-billion, may also feel the heat.

Mark Kingon , head of the non-profit sector for the revenue service, said the new regulations were aimed at encouraging transparency among churches and preventing them from abusing their tax-exempt status. The taxman also wants to end the advantage they have over business competitors who are taxed, he said.

According to the new rules, churches must now submit detailed reports, including financial statements, to the Non-Profit Organisation Directorate to maintain their tax-exempt status. All public-benefit organisations have to account to the directorate.

Kingon said that "excessive" salaries paid to ministers and pastors would also come under the microscope. According to the new regulations, wages should be in line with what is "generally considered reasonable in the sector and in relation to the service rendered".

But Kingon admitted that this was still open to debate.

"It will be difficult to reconcile different organisations, where some take a vow of poverty and others are recognised in the same light as the chief executive of a company," he said.

Kingon confirmed that certain churches were concerned about having to register with the NPO, as this would mean public declaration of their financial affairs.

Dr John de Gruchy, of the University of Cape Town's Research Institute on Christianity in SA, said that the independent "prosperity" churches were likely to be harder hit by the new regulations than the mainline churches.

" Most of them [mainline churches] are paid out of their congregational funds and do not receive monies from their churches of origin in Europe.

Most [of their ministers] live meagerly.

"I think it might be some of the prosperity churches, such as Rhema, where it may be an issue," said De Gruchy.

But Ron Steele, spokesman for Rhema Bible Church, which claims to be worth about R150-million, refused to say whether the church was worried about the new regulations.

He also refused to divulge the salary of the church's head pastor and founding member, Ray McCauley, saying it was confidential.

"Bona fide members of the church are free to approach the administrator of the church if they wish to inquire about any of the financial matters.

"The salaries are set by the governing elders of the church, in conjunction with a financial advisory board and other advisers, who include chartered accountants and business executives in the church," said Steele.

Independent auditors and legal consultants were ensuring that Rhema complied with the new regulations, he said.

Professor Marius Maritz, who is advising the South African Catholic Bishops' Conference, said priests and nuns generally earned only a "nominal amount" and so would not be affected by the regulations.

The bishop of the Anglican Church for the Southern African province, the Rt Rev David Beetge, said it had no problems with making its financial records available.

"I think it is only fair, as the churches enjoy such a tax-free status, that they should be accountable. But it is unfair that where the church is providing service to the community, the land is being taxed. This should not be, as the church is also a part of the moral fibre of that community," said Beetge.

A clergyman in charge of a parish of about 500 would earn about R3 500 a month, he said. This excluded pension and medical aid.

Beetge said the only investment the Anglican Church had was its pension fund worth R260-million.

The Zion Christian Church - the largest African independent church in South Africa with about six million members - said it could not comment because it had to put questions to its council. The ZCC has its own investment company, Kganya group, which focuses on burial and personal-accident schemes for more than 280 000 members.

The general secretary of the Methodist Church in South Africa, the Rev Ross Olivier, said the highest-paid minister earned about R161 000 a year.

He said the church was not too worried about the impact of the new tax laws.

"Logistics is our greatest problem, as we have about 4 500 congregations," said Olivier.