Taxing the President: The Income Tax Implications of the Security Improvements made to the Private Residence of President Jacob Zuma

• Jurisdiction: South Africa
• Author: Charles De Matos Ala
• Citation: (2017) 28 Stell LR 187
• Date: 27 May 2019
• Published date: 27 May 2019
• Pages: 187-212

187

TAXING THE PRESIDENT: THE INCOME

TAX IMPLICATIONS OF THE SECURITY

IMPROVEMENTS MADE TO THE PRIVATE

RESIDENCE OF PRESIDENT JACOB ZUMA

Charles De Matos Ala

BA LLB LLM Higher Diploma Company Law

Lecturer, University of the Witwatersrand, Johannesburg

Attorney of the High Court of South Africa

1 Introduction

This art icle examines the income tax liability at taching to the remuneration

received by a p erson holding the ofce of pre sident of the Republic of South

Africa. In particular, this article considers the potential tax implications

arising from one of the privileges granted to the president, namely, the

installation by the state of security measu res at the president’s private or

non-ofcial residence. Accordingly, this article explores the tax implications

arising from the so -called secur ity upgrades made to President Jacob

Gedleyihlekisa Zu ma’s private residence near the village of Nkandla, Kwa-

Zulu Natal (“the Nkandla residence”). This article is not concerned with

the political controversy sur rounding the Nkandla project but draws on the

reports of the Public Protector1 and the Special Investigating Unit (“SIU”)2

to glean the extent of the project to secu re the Nkandla residence and the

circumstances surrounding that project.3 The reports of two parliamentary

committees, t he Joint Standing Commit tee on Intelligence (“JSCI”)4 and the

1 Public Prote ctor Secure in C omfort: Report o n an investigat ion into allegat ions of improp riety and

unethical con duct relatin g to the installat ion and impleme ntation of sec urity meas ures by the Depa rtment

of Public Works at and i n respect of the p rivate resid ence of Presid ent Jacob Zuma a t Nkandla in

KwaZulu-Natal Province Report 25 of 2013/14.

2 Special Invest igating Unit (SIU ) “Final Report to the Presid ent of the Republic of Sou th Africa , His

Excellency, Preside nt JG Zuma In re Proclamation R 59 of 2013 – Prest ige Project involving secur ity

upgradin g of the private residence of the P resident situated at Nka ndla, KwaZulu-Natal” (20-08-2013)

Parliament of the R epublic of South Africa

to_the_President_of_the_RSA_dated_20_August_ 2014.pdf> (accessed 10-05-2015).

3 Neither the Publ ic Protector nor SIU we re tasked to invest igate matters of ta xation as such thei r findings

are not defin itive on the issue. Inte restingly, however, unless ove rruled by a cour t the Public Protect or’s

finding s, decisions and re medial prescr iptions are bin ding upon affec ted persons or st ate instit utions. See

Democrati c Alliance v South African Bro adcasting Corporat ion SOC Ltd 2016 2 SA 522 (SCA) paras

52-53.

4 Joint Standi ng Committee on Intel ligence (JSCI) “Report o n the Prestige Project A: Se curity Measure s

at the Presiden t’s Private residence: Nka ndla” (08 -11-201 3) PMG

report/56/# ftnref9> (ac cessed 19-04- 2015).

(2017) 28 Stell LR 187

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Ad Hoc Committee established to consider the secur ity improvements to the

Nkandla residence (“Ad Hoc Committee”)5 are also relevant to t he issue.

The president is remunerated in terms of the Remuneration of Public Ofce

Bearers Act 20 of 1998 (“Remuneration Act”). In addition to a salary and

allowances, the president is also entitled to “privileges”.6 One privilege

available to public ofce bearers is the installation of security measures

to their privat e, that is, thei r personal or non-ofcial residences. It wa s in

providing this privilege that the installation of security measures at Nkandla

became the subject of controversy in t he press and political discourse.

The controversy stems f rom the unprecedented scope and cost of the project

carried out at state expense to secure President Zuma’s homestead.7 The

scope and extent of the project of securi ng President Zuma’s homestead was

complicated by the fact that the improvements related to two pieces of land.8

The rst was land occupied by President Zuma, the Nkandla residenc e. The

second was land immed iately adjacent to the Nkandla residence and occupied

by the state (“the state precinct”). Therefore, the improvements to both areas

are referred to collectively as “t he Nkandla project”. The Public Protector’s

investigation into the controversy soug ht to determine whether, inter alia, the

improvements went beyond what was required for President Zuma’s security

and whether he was liable to reimbur se the state for certain improvements.9

The general consensus between the Public Protector, the SIU and the

various parliamenta ry committees is that Pr esident Zuma was entitled to have

his private residence upg raded.10 The Public Protector and the SIU at tributed

the scope and cost of the Nkandla project to two causes. First, a failure to

adhere to the measu res required by various secur ity evaluations conducted by

the South African Police Ser vice (“SAPS”) and the South African National

Defence Force (“SANDF”).11 The second cause of the problem was the fai lure

5 Ad Hoc Committ ee Report of the Ad Hoc Commit tee to consider the Repor t of the President regard ing

the securit y upgrade s at the Nkandl a private resi dence of the Pre sident Annou ncements, Tabling s

& Committee Rep orts 91 of 2014 (2014) 2949-2983. The Committee was e stablished in t erms of a

resolution of the Nat ional Assembly date d 19 August 2014 to consider the repo rts of inter alia, Pre sident

Zuma, the JSCI a nd the Public Pro tector (Ad Hoc Comm ittee Report o f the Ad Hoc Committe e 2949-2951).

6 S 2(1) of the Remuneration Act .

7 The state’s expend iture on the se curity upg rades at Nk andla was in exc ess of R 215 million (Publ ic

Protector Secure in Co mfort 48; Special Investigat ing Unit (SIU) “Final Repor t to the President of the

Republic of South Af rica, His Excelle ncy, President JG Zuma In re P roclamation R 59 of 2013 – Prestige

Project involvi ng securit y upgradin g of the private re sidence of the Pres ident situate d at Nkandla ,

KwaZu lu- Nata l” (20-08-2013) Parliament of the Re public of South Afr ica 1).

8 Approximate ly 48% of the expendit ure related t o the Nkand la residence (Joint St anding Com mittee

on Intelligenc e (JSCI) “Report on the Pres tige Project A: Security Me asures at the President ’s Private

residence: Nkandla” (08 -11-201 3) PMG paras 4, 11.5).

9 Public Prote ctor Secure in Comfort 9. The inves tigation was conducted in t erms of section 182 of the

Constitut ion of the Republic of South Africa , 1996 (“Const itution”) read with sect ions 6 and 7 of the

Public Prote ctor Act 23 of 1994.

10 Ad Hoc Commit tee Report of the Ad Ho c Committee 2973; Speci al Investigati ng Unit (SIU) “Final Re port

to the Preside nt of the Republic of South Afr ica, His Excellency, Presid ent JG Zuma In re Proclama tion

R 59 of 2013 – Prestige Project i nvolving security upgra ding of the private residenc e of the President

situated at N kandla, KwaZulu-Na tal” (20-08-2013) Parliament of the Republic o f South Africa 2 41.

11 Public Prot ector Secu re in Comfort 21, 427; Special Inves tigating Unit (SI U) “Final Repo rt to the

President of the Re public of South Afr ica, His Excellency, Pres ident JG Zuma In re Procl amation R 59 of

2013 – Prestige Project i nvolving securit y upgrading of the pr ivate residence of the Pr esident situated at

Nkandla, KwaZulu-Natal” (20-08-2013) Parliament of the Rep ublic of South Afri ca 132.

188 STELL LR 2017 1

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