WHAT REMAINS UNCHANGED
* Estate duty remains at 20 percent, as do the estate duty exemptions – at R3.5 million for an individual and up to R7 million for a couple. The first-dying spouse can leave assets free of estate duty to the surviving spouse, and any unused portion of the first-dying spouse’s estate duty exemption is passed on to the estate of the second-dying spouse.
* The capital gains tax (CGT) inclusion rate remains at 33.3 percent for individuals and special trusts, and at 66.6 percent for companies and normal trusts. But the tax-bracket changes mean the maximum effective rate on taxable capital gains increases from 13.3 percent to 13.65 percent for individuals and special trusts and from 26.6 percent to 27.31 percent for other trusts. The annual exemption for individuals remains R30 000 a year.
* The CGT exemption on death is unchanged at R360 000.
* Dividend withholding tax remains at 15 percent.
* Exemptions on interest remain at R23 800 a year if you are under the age of 65 and R34 500 a year if you over the age of 65 – but the exemptions are complemented by the tax-free savings accounts, which can be used from March 1.
* Pension fund contributions remain at 7.5 percent of retirement funding income or R1 750.
* Retirement annuity contributions remain at 15 percent of taxable income other than retirement funding income, or R3 500 less any contributions to a pension fund, or R1 750.
* Arrears retirement contributions remain at R1 800 a year.
OFFSHORE ALLOWANCE UP
The R4 million you are allowed to invest offshore will be increased to R10 million or R20 million per family.
This foreign capital allowance also covers the amounts you can take out on emigration.
In addition to this lifetime limit, you are entitled to take R1 million a year as a discretionary allowance.
Previously there were sub-categories for this allowance, but the Budget Review notes that these will be removed.
STATE GRANTS UP MARGINALLY
If you or a family member rely on the government for a social grant, it will have increased as follows:
The state old-age grant for people under 75 goes up from R1 350 to R1 410, and for people over 75 it goes up from R1 370 to R1 430.
The foster care grant goes up from R830 a month to R860 a month, the child support grant goes up from R315 a month to R330 a month, and the care dependency grant increases from R1 350 to R1 410
a month.
UIF BREATHER FOR YOU AND YOUR BOSS
Your payments to the Unemployment Insurance Fund (UIF) are likely to be reduced as of April 1 – which could put a few rands more in your pocket each month.
Currently you pay contributions to the UIF at one percent of your salary and your employer contributes |one percent.
The maximum income on which UIF contributions are based is currently R14 872 a month, which means that the maximum UIF contribution you can make is R148.
In his Budget speech this week, Finance Minister Nhlanhla Nene said the UIF had a surplus of R90 billion and, as a result, the maximum income on which you pay contributions to the fund would be reduced for a year to R1 000.
This means the most anyone will pay for UIF contributions is R10 and the most your employer will contribute on your behalf is R10.
As a result, you can expect anything up to R138 extra on your salary each month.
BIG BREAK FOR SMALL BUSINESS
Finance Minister Nhlanhla Nene has given a boost to small businesses that pay turnover tax below R1 million a year. The tax threshold will be raised from a turnover of R150 000 to R335 000, and the maximum rate will be reduced from six percent to three percent. These tax changes will take effect on April 1 this year.
Chris Blair, the chief executive of remuneration consultancy 21st Century, says the adjustments to the tax rates should be a win-win for National Treasury and the small business sector.
Raising the threshold to R335 000 is likely to persuade more micro-enterprises to come out of the shadows and register for tax, while the lower rates will make more businesses tax-compliant.
Cash flow is a major problem for small businesses while they struggle to find their feet, and raising the threshold and halving the maximum rate will free up cash that can be used to grow a business.
Daryl Blundell, the general manager of Sage Pastel Accounting, says Nene’s announcement that small businesses that do business with the state must be paid within 30 days is a positive development for the sector.
He also welcomed the minister’s undertaking to establish small business desks at the South African Revenue Service to help small businesses comply with tax requirements.