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COUNCILLOR SALARIES, ALLOWANCES AND
BENEFITS
1
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Presentation
Outline
1. Introduction
2. Legislative Framework
3. Prescribed Processes
4. Implementation
4.1 Grading
4.2 Total Remuneration Package
4.3 Motor Vehicle Allowance
4.4 Salary
4.5 Additional Benefits
4.6 Section 8(1)(d) Tax Allowance
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Introduction
Recognition
• In terms of relevant legislation (Public Office bearers Act,
Income Tax Act) councillors are recognised as Public Office
Bearers.
• Remuneration system as it relates to municipal councillors,
besides being financed directly from municipal income, is
different from that of Public Office bearers in other spheres of
government.
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Legislative Framework
Constitution of the RSA
• Section 219(1) of the Constitution stipulates that an Act of Parliament must
establish a framework for determining the upper limits of salaries,
allowances and benefits of POBs.
Relevant National Legislation
• In an attempt to deal with the remuneration of Public Office Bearers as
envisaged in the constitution, parliament enacted:– Independent Commission for the Remuneration of Public Office–
Bearers Act of 1997, that establishes the Commission, which is to make
recommendations concerning the salaries, allowances and benefits of
public office-bearers; and
– the Remuneration of Public Office Bearers Act No.20 of 1998, which
provides the framework for remuneration of public office-bearers.
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Legislative Framework
Municipal Finance Management Act of 2003 (MFMA)
•
Section 167 has a major impact on the remuneration of
political office bearers.
- It stipulates that political office-bearers may only be
remunerated within the framework of the Remuneration of
Public Office Bearers Act and Section 219 (4) of the
Constitution.
- It declares that any payment, whether in cash or kind, made
outside this framework would be regarded as an irregular
expense.
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PROCESS TO DETERMINE SALARIES,
BENEFITS AND ALLOWANCES FOR
PUBLIC OFFICE BEARERS
NAT &
PROV
Independent
Commission
Promulgates
Recommendation
President
Determines
through
promulgation in
Govt Gazette
Implementation
Vis-à-vis
LOCAL
Independent
Commission
Promulgates
Recommendation
Minister issue
draft followed
by Final Notice
in Govt Gazette
1.Council
2.MEC Concurrency
3. Implementation
Process for determination of salaries, benefits and allowances of
Councillors curiously differs from other public office bearers.
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Implementation
Upper Limits are published annually and deals with the following:
1.
Grading of municipalities for purposes of the remuneration scales;
2.
Upper Limits of total remuneration packages of full-time and part-time
councillors;
3.
Upper Limits of allowances of full-time and part-time councillors;
4.
Upper limits of remuneration or allowances in respect of appointed
councillors (district councillors);
5.
Upper limits of cellphone allowances;
6.
Upper Limits of pension fund contributions and medical aid benefits
of councillors; and
7.
Tax Allowance: Section 8 (1)(d) of Income Tax Act.
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IMPLEMENTATION
: GRADING
Number of
Total
Population in
Area?
Municipal
Income for
previous
financial year?
GRADE of
Municipality
(1 – 6)
EXAMPLE
170 000
=
25 points
R 150 m
=
25 points
50 points
Grade 3
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DM COUNCIL
COMPOSITION
Appointed
Councillors
Proportional
Representative
Councillors
REMUNERATION
- LM, total rem
package
-DM, difference
or sitting
allowance + trav
District
Municipality
District
Municipal
Councillors
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TOTAL REMUNERATION
PACKAGE
SALARY
MOTOR
VEHICLE
ALLOWANCE
TOTAL
REMUNERATION
PACKAGE
DEFINITION
- housing;
- pension fund;
- medical aid;
- basic salary
NOT more
than 25 % of
total package
Additional to Total Remuneration Package:1.
2.
3.
Travel reimbursement
Out of pocket expense and
Cellphone allowances
Salary + Motor
vehicle allowance
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TYPES OF MOTOR VEHICLE
ALLOWANCE & BENEFITS
Type 1.
25 % ALLOWANCE: incl. 500km travelled per month on official
Business kilometres travelled above 500km may be claimed.
Type 2.
25 % ALLOWANCE + MAYORAL VEHICLE
Type 3.
NO ALLOWANCE
USE OF MUNICIPAL OWNED VEHICLE FOR OFFICIAL PURPOSES
Type 4.
NO ALLOWANCE
AMOUNT FORMS PART OF SALARY COMPONENT
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SALARY COMPONENT
HOUSING ALLOWANCE
PENSION FUND CONTRIBUTION
15% Calculated on the Basic Salary Component
SALARY
MEDICAL AID BENEFIT
2/3 of membership premium or fee with
maximum of R 1 440 per month
BASIC SALARY COMPONENT
Includes a Tax allowance of up
to R 120 000 per annum
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Basic Salary Component
• Basic Salary component includes the Tax Allowance
in terms of the Income tax Act
The “basic salary” is the component of the salary that
includes the Tax allowance as permitted by Section 8(1)(d)
of the Income tax Act, 1962 but specifically excludes a
housing allowance as provided in items 6(b) and 9(b), the
municipal contribution to a pension fund as provided in
item 11(a) and the municipal contribution to a medical aid
scheme as provided in item 11 (b).
• NOT IN ADDITION TO THE TOTAL PACKAGE.
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Section 8(1)(d) Tax Allowance
DEFINITION
Allowance granted to the holder of a public office to defray
expenditure incurred in connection with his /her office, to have
been expended to the extend that the expenses were actually
incurred for the purpose of his/her office in respect of :1. Secretarial or duplicating services, stationery, postage
or telephone calls;
2. The hire and maintenance of office accommodation;
3. Travelling;
4. Hospitality extended at any official function;
5. Subsistence and incidental costs incurred.
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Section 8(1)(d) Tax Allowance
IMPLICATIONS OF THE TAX ALLOWANCE
1. 50% of allowance is taxable
2. Part-time public office bearers - 50% of allowance is taxed at
25%
3. Full-time public office bearers – tax tables to be applied
4. Full allowance (100%) will be shown on IRP5 certificate –
code 3708
5. Proof of expenses should be produced when requested by
SARS
6. Expenses not covered under section 8(1)(d), can still be
reimbursed for out of pocket expenditure.
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Example Section 8(1)(d)
Grade 5 (Part-Time)
SALARY (A)
Housing
159 471 (13 290)
0.00
Medical Aid
17 280 (1 440)
Pension Fund
18 547 (1 546)
Basic Salary
Sec 8(1)(d)
Vehicle (B)
Total Package
(A + B)
123 644 (10 304)
120 000(10 000)
53 157
(4 430)
212 628 (17 720)
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TOTAL REMUNERATION
PACKAGE
SALARY
MOTOR
VEHICLE
ALLOWANCE
TOTAL
REMUNERATION
PACKAGE
DEFINITION
- housing;
- pension fund;
- medical aid;
- basic salary
NOT more
than 25 % of
total package
Additional to Total Remuneration Package:1.
2.
3.
Travel reimbursement
Out of pocket expense and
Cellphone allowances
Salary + Motor
vehicle allowance
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ADDITIONAL TO TOTAL
REM PACKAGE
Additional to Total Remuneration Package:1.
Travel reimbursement
Kilometres travelled over and above the 500km for official business to
be claimed from municipality in terms of Dept of Transport Tariffs
2.
Out of pocket expense
Actual Expenses incurred during performance of official duties.
3.
Cellphone allowances
Monthly allocation made in terms of Notice:•
Grade 6 Mayors – R 2 997
•
Other Mayors and Full-time Councillors – R 1 496
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Participation in MCPF
• Participation open to all Municipalities with eligibility for
membership being restricted to Councillors of a participating
Municipality.
• Total contributions:- 28.75% of pensionable allowances,
meaning that in addition to the 15% contribution included in
Total Package councillor must contribute 13.75%.
• Contributions payable are to be deducted from their total
remuneration package by the municipality concerned and paid
to the Fund by that Municipality on the members’ behalf.
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2009/10
Grade 4 Part Time
INCOME
SALARY
DEDUCTIONS
10805.09
TAX
1658.49
TRAVEL
ALLOWANCE
3601.67
UIF
124.78
CELL PHONE
889.00
PENSION (15%)
1409.36
PENSION
(13.75%)
1291.91
COUNCIL
SUNDRY
INCOME
15295.76
DEDUCTIONS
TOTAL
EARNINGS
227.44
4711.96
10583
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THE END
THANK YOU
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