It's always difficult when on exchange in "The Colonies". A failure to return a salute, despite the lack of a hat, can be seen to be disrespectful. As always, you have to gauge the situation and sometimes join in with the crowd! It's often better to be slighly incorrect than to be seen as a d"ŁK.
I also remember being briefed as a lad that it was appropriate to salute a lady you recognised.
As for politicians, I would always acknowledge a position of trust. As has been said, the salute in military circles acknowledges HM's commission.