“Disappointingly, there was no mention of any increases to the limits on tax-free investments or incentives to promote retirement fund savings, which seems mismatched to the president’s approach to growth and savings. Another interesting observation is the absence of any notable attempts to further introduce wealth taxes,” he says.
Keswell highlights four take-outs from the National Treasury’s Budget Review document that affect South African investors and planners:
1. Refining the foreign employment income tax exemption for South African residents. From March 1, 2020, South Africa residents who spend more than 183 days in employment outside the country, will be taxed on foreign employment income of more than R1million. “This is an important point for any South Africans working abroad to keep in mind when planning their finances in the medium to long term,” says Keswell.
2. Reviewing the tax treatment of surviving-spouse pensions. Treasury has recognised the hardships caused for surviving spouses, who are often liable for tax on income in their personal capacity, as well as any spousal pension received. Often, this can push the surviving spouse into a new tax bracket. “To address this, Treasury is aiming to introduce a flat rate on spousal income, which should make the system fairer. However, the exact mechanism through which this will be achieved is yet to be clarified so we will watch developments closely here,” Keswell says.