The proposed new tax table provides for some relief against inflation:
|Individuals and special trusts
|Taxable Income (R)
||Rate of Tax (R)|
|0 160 000
||18% of each R1|
|160 001 250 000
||28 800 + 25% of the amount above 160 000|
|250 001 346 000
||51 300 + 30% of the amount above 250 000|
|346 001 484 000
||80 100 + 35% of the amount above 346 000|
|484 001 617 000
||128 400 + 38% of the amount above 484 000|
|617 001 and above
||178 940 + 40% of the amount above 617 000|
The primary rebate increases to R11 440 and the secondary rebate for taxpayers older than 65 to R6 390. The third rebate for taxpayers older than 75 is also increased to R2 130. This means that the tax threshold is increased to R63 556 for people younger than 65, R99 056 for those older than 65 and R110 889 for taxpayers older than 75.
The tax rate of personal services companies is reduced from 33% to 28%.
Taxation of Interest
Interest rate exemptions remained at R22 800 and R33 000 respectively with the amount allowed for foreign interest remaining at R3 700 of the respective exemptions. By April 2014 the interest exemption will however be replaced with new investment vehicles of which the interest, dividend and CGT return will be completely tax exempt.
An increase in the dividend tax that will replace Secondary Tax on Companies (STC) from the 1st of April 2012 has been announced. Where STC was paid by the company at 10%, the new dividend tax will be paid at 15% by the taxpayer, but withheld by the company or agent. The effect is that the tax paid on the same profit declared by a company will increase from R9.09 per R100 to R15.00; a 65% increase in the tax rate as of the 1st of April 2012.
Capital gains tax
CGT inclusion rates are increased to 33.3% for individuals and special trusts and to 66.6% for trusts and companies as from the 1st of March 2012. This means that the maximum CGT rate for individuals and special trusts will increase to 13.3%, for companies it will be 18.6% and for other trusts the effective tax rate is 26.7%.
The following CGT exemptions have been increased:
Annual exclusion from R20,000 to R30,000
Exclusion upon death from R200,000 to R300,000
Primary residence exclusion from R1.5m to R2m
Exclusion on small business disposal from R900,000 to R1.8m for business owners older than 55.
The maximum market value of assets allowed for a small business disposal
for business owners over 55 increased from R5m to R10m.
Medical tax credits
As from the 1st of March 2012 taxpayers younger than 65 will receive a tax credit for medical expenses that will be deductible from their income tax payable. If you earn less than R346,000 the new tax credits will result in a higher deduction than was previously the case. People earning more than R346,000 will have a smaller tax saving. The tax credit is R230 per month for the first two beneficiaries and R154 per month for any additional beneficiaries. If your medical aid contributions exceed 4 times your tax credit, the excess can be added to your out of pocket medical expenses. If this amount exceeds 7.5% of your taxable income, the amount above 7.5% can be deducted as an expense against your taxable income.
The medical deductions of disabled persons and taxpayers older than 65 will only change with effect from the 1st of March 2014.
Retirement fund deductions
As from the 1st of March 2014 contributions by employees and employers to pension, provident and retirement funds will be tax deductible by individual taxpayers. Deductions will be limited to 22.5 and 27.5 per cent, for those below and above 45 years respectively of the higher of employment or taxable income. Annual deductions will be limited to R250 000 and R300 000 for taxpayers below and above 45 years respectively.
Access to retirement funds by false job terminations will in future not be allowed.
From the 1st of March 2012 the clean break principle with regards to divorces will also apply to the GEPF. The formula C tax-free benefit will also apply to the nonmembers portion.
Duties & Levies
Excise duties are increased as follows:
Spirits increased by between 20%
Cigarettes increased by 6%
Imported passenger cars increased by 5%
Fuel levy increased by 20c to 197.50c
RAF levy increased by 8c to 88c
Electricity levy increased by to 3.5c/kWh
National Health Insurance
A National Health Insurance Scheme will be phased in over the next 14 years with a payroll tax, increases in VAT and a surcharge on high earners seen as possible mechanisms to fund this.
The Security Transfer Tax (STT) exemption for brokers trading for their own benefit will be replaced by a STT at a lower rate than the standard 0.25%. Derivatives will also become subject to STT. These changes will come into effect from the 1st of March 2013.
From the 1st of October 2012 certain planes, helicopters and boats will be subject to a luxury goods tax of up to 10%.
By : Ronald King Source : PSG Konsult