Finance Minister Pravin Gordhan this week announced R9.5 billion in tax relief for individual taxpayers, but he admitted it was largely to take account of inflation, with only “modest real tax relief”.
After inflation and increases in other direct and indirect taxes are taken into account, the reductions of between R685 and R5 303 a year may not amount to much for you.
The highest rand amount in relief is for taxpayers over the age of 75 earning R750 000 or more a year, while the highest percentage decrease – 72.5 percent, or R685 for the year, is for taxpayers below age of 65 earning less than R65 000 a year.
The Budget Review also shows that the greatest proportion of tax relief – in terms of numbers of taxpayers and amounts paid – will be for taxpayers in the R160 000 to R600 000 tax brackets.
The tax threshold – the annual amount you can earn without paying any tax – for under 65s has moved up to R63 556 a year from R59 750 a year.
The tax threshold for over 65s is now R99 056 (up from R93 150).
Taxpayers over the age of 75 will not pay tax on annual earnings below R110 889 in the tax year ahead (up from R104 261) this year.
To give effect to the tax thresholds, the South African Revenue Service provides tax rebates that you deduct from your tax as calculated according to the tax tables.
The rebates and their increases are published in the table on the left together with the tax tables.
There were also some inflation adjustments to the amounts you can use to claim against a travel allowance you are paid for using your vehicle for work purposes.
The fuel costs and maintenance costs have been adjusted, but the fixed costs remain at the same levels as they were for this year.
When you consider the effect of the new tax tables on your take-home pay, don’t forget to take into account the effect of the tax credits for medical scheme contributions.