Hi,
The budget speech was not very exciting for tax payers this year but there have been a few positive developments as from 1 March 2015:
• Tax table was adjusted for inflation as predicted and high income earners will now have a ceiling of 41% (previously 40%)
• Tax rebates have been increased by inflation line with above
• Sin Taxes much lower than inflation and only spirits and tobacco taking a knock
• Introduction of the new “Tax Free” savings vehicle with a max of R30,000 per year contribution with a lifetime max of R500,000 – Old Mutual has already launched their new product and the benefits to clients are really worthwhile in terms of flexibility and liquidity (no penalties)
• VAT remains at 14% for this year with an increase predicted in next years budget
• Tax thresholds have been increased to R73,650 / R114,800 / R123,350
• Medical credits have been increased from R257 to R270 (R172 to R181)
• Company tax and Small business tax to remain at 28% (Max) with relief being given to Micro Businesses registered for Turnover Tax at a maximum of 3%
• CGT (Capital Gains Tax has seen a marginal increase due to the increase in maximum tax rates from 40% to 41% - exclusions and exemptions remain as per the previous tax year
• Estate Duty and Donations tax remain at 20%
• Tax free portion on Retirement funds remains at R500,000 for retirees
• Transfer duty on property has seen a significant relief for property buyers up to purchases of R1,750,000. Transfer duty is payable as follows on property purchases :
o Up to R750,000 - 0% o R750,001 to R1,250,000 – 3% o R1,250,001 to R1,750,000 – R15,000 + 6% on the value above R1,250,000 o R1,750,001 to R2,250,000 – R45,000 + 8% on the value above R1,750,000 o R2,250,001 and above – R85,000 + 11% of the value above R2,250,000
• Exchange control – GOOD NEWS…… Annual allowance for individuals to send money offshore has been increased to R11 mill (without exchange control approval required) – SARB will consider amounts in excess of this. COMPANIES….. can invest up to R1 bill offshore provided they own at least 10% of the offshore company
Interest rates remain the same. The Fuel Levy and Road Accident Fund have been increased which will result in a petrol price hike of 80c. The UIF fund is in surplus and therefor contribution rates will be decreased. There will be a temporary hike in electricity bills until the shortage has been dealt with.
Under Review : 1. The retirement fund contributions going forward – 27,5% of personal income as a maximum contribution by individuals for tax relief purposes – fringe benefit tax payable for employer contributions 2. Lump sum deposits on retirement to RA investments to avoid tax, estate duty etc…. 3. Monthly tax relief on medical tax credits for those over the age of 65 4. Withdrawal from RA’s for non-residents 5. Deferment of retirement income until a date after retirement – to be considered 6. Foreign Capital allowance for emigration increased to R10 mill (single) or R20 mill (family unit) – to be implemented the 1 April 2015
Not a spectacular budget but some positive relief in some quarters.
Kind regards Kharmen
Kharmen Mathios FSA™ Financial Advisor BCOM (Banking), AIBSA, CEA
kharmen@efadvise.co.za
Cell: +27 (0)82 900 5665 Tel: +27 (0)11 465 8872 Fax: +27 (0)86 695 1685