Cape Town - Individuals will benefit from R7 billion in personal income tax relief, together with adjustments to the medical tax credit and other monetary thresholds amounting to about R350 million, Finance Minister Pravin Gordhan announced on Tuesday.
Tabling his 2013 Budget in the National Assembly, he said that over the past decade, the tax base had been steadily broadened, both through policy reforms and improved revenue administration.
This had made substantial tax relief possible, contributing both to household disposable income and a lower cost of doing business.
Other tax proposals for 2013 included reforms to the tax treatment of contributions to retirement savings, an employment incentive through the tax system for first-time job seekers, and further tax relief for small businesses, including an increase in the monetary tax thresholds applicable for small business corporations.
Gordhan said a review this year would assess the tax policy framework and its role in supporting the objectives of inclusive growth, employment, development, and fiscal sustainability, among other things.
This year, an automated tax clearance system would be implemented, and the policy paper on carbon emissions published with the view of introducing a carbon tax from 2015, he said.
According to the budget review document, also tabled on Wednesday, individuals whose taxable income is from one employer and below R250,000 a year will not have to submit income tax returns. The primary rebate for individuals increases from R11 440 to R12 080.
The tax threshold for people below 65 years rises from R63 556 to R67 111; for those 65 and over, from R99,056 to R104,611; and, for those over 75, from R110 886 to R117 111.
Monthly tax credits for medical scheme contributions will be increased from R230 to R242 for the first two beneficiaries, and from R154 to R162 for each additional beneficiary, with effect from March 1.
Tax relief for small businesses included increasing the R14 million turnover threshold for small business corporations to R20 million, and a revision of the graduated tax structure for such corporations.
Regarding public benefit organisations (PBOs), the review states that donations to PBOs working in the areas of welfare and humanitarian activities, health care, education, conservation, environmental protection, animal welfare, and land and housing are currently deductible up to 10 percent of taxable income in the year the donation is made.
Donations in excess of this figure cannot be carried forward, which reportedly discourages large donations.
Government proposes to allow donations in excess of 10 percent of taxable income in any given year to be rolled over as allowable deductions in subsequent years.
Also under consideration are rules governing the amount of funding that must be distributed where PBOs provide funding to other PBOs.