Taxpayers under the age of 65 may soon be able receive R30 000, instead of R20 000, of taxable income from interest, foreign dividends and fixed property rentals before they are liable to register as a provisional taxpayer.
But taxpayers over the age of 65, who can currently receive taxable income from interest, foreign dividends and rentals up to the tax threshold without having to register for provisional tax, will have to do so if they receive more than R30 000 of this income. This is according to a draft bill to amend the Tax Administration Act that was released this week.
It proposes aligning the exemptions for taxpayers aged 65 and over with those for taxpayers under 65.
Provisional taxpayers have to submit two provisional tax returns and make any necessary payments during the tax year, as well as a third, voluntary payment.
Employer contributions
The Tax Laws Amendment Bill proposes a formula to determine the taxable fringe benefit for contributions made by employers to a defined benefit retirement fund.
A taxable fringe benefit for employer contributions to your retirement fund will be added to your salary from March 1 next year, when the tax deductions for contributions to a retirement fund are standardised across all funds.
The bill proposes a formula to calculate a notional employer contribution for this purpose. This is because the value of contributions made by an employer may not be an accurate reflection of the benefits that fund members receive. An example of this, cited in the explanatory memorandum, is when a defined benefit fund is in financial difficulty and the employer has to make additional contributions to meet the expected liabilities.
Fringe benefit tax on vehicles
The bill also contains a proposed amendment to the provisions of the Income Tax Act relating to the taxable fringe benefit that is added to your income when you have the right to use a company-owned car.
The law currently provides for a monthly fringe benefit of 3.5 percent of the “determined value” of the vehicle. The South African Revenue Service refers to this as the “cash cost, including VAT”.
According to the explanatory memorandum, employers are using different methods to calculate the “determined value” of a vehicle.
The proposed amendment is that the monthly fringe benefit is calculated using the actual retail market value of the vehicle for all vehicles purchased, acquired or manufactured after March 1 next year.