budget speech

A SUMMARY OF THE BUDGET SPEECH
FOR THE 2017/2018 TAX YEAR

  • A NEW TOP PERSONAL INCOME TAX RATE OF 45% FOR THOSE WITH TAXABLE INCOMES ABOVE R1.5 MILLION.
  • AN INCREASE IN THE DIVIDEND WITHHOLDING TAX RATE FROM 15% TO 20%.
  • AN INCREASE IN THE TAX RATE FOR TRUSTS FROM 41% TO 45%.
  • AN INCREASE IN THE THRESHOLD FOR WHICH TRANSFER DUTY IS PAID FROM R750 000 TO R900 000.

 

THE BUDGET NEWS
22/02/2017

 

The Minister of Finance, Pravin Gordhan, delivered his 2017 budget speech today and tabled the taxation proposals for the 2017/2018 tax year.

The commentary and the tables summarise the more important proposals and those to which reference is most frequently made. Accordingly, the information given is not comprehensive. The proposals will be debated by the house during the next two weeks and are therefore subject to amendment before they are enacted.

 

PERSONAL TAXES

A single rate scale for individual taxes has been retained, however the tax brackets have been increased, eliminating the effects of inflation and results in a reduced tax liability.

The maximum marginal rate of 45% is in effect from R1 500 001 has been introduced this year.

The primary rebate is increased from R13 500 to R13 635 which has the effect of increasing the tax threshold from R75 000 to R75 750.

The secondary rebate for persons over 65 years which is increased from R7 407 to R7 479 and the tax threshold has increased from R116 150 to R117 300.

A third rebate for persons over 75 years is increased from R2 466 to R2 493 increasing the threshold from R129 850 to R131 150.
TAX RATES   INDIVIDUALS – 2017 / 2018

Taxable income

Rates of tax

R0 – R   189 880

18% of each R1

R189 881 – R   296 540

R34 178 + 26% of the amount over R189 880

R296 541 – R   410 460

R61 910 + 31% of the amount over R296 540

R410 461 – R   555 600

R97 225 + 36% of the amount over R410 460

R555 601 – R   708 310

R149 475 + 39% of the amount over R555 600

R708 311 – R1 500 000

R209 032 + 41% of the amount over R708 310

R1 500 000 +

R533 625 + 45% of the amount over R1 500 000

TAX RATES   INDIVIDUALS – 2016 / 2017

 

Taxable income

Rates of tax

R            0 – R188 000

18% of each R1

R188 001 – R293 600

R33 840 + 26% of the amount over R188 000

R293 601 – R406 400

R61 296 + 31% of the amount over R293 600

R406 401 – R550 100

R96 264 + 36% of the amount over R406 400

R550 101 – R701 300

R147 996 + 39% of the amount over R550 100

R701 301 +

R206 964 + 41% of the amount over R701 300

TAX   THRESHOLDS

 

Taxable income

 

2018

2017

Persons under 65

R75 750

R75 000

Persons 65 and under 75

R117 300

R116 150

Persons 75 and over

R131 150

R129 850

TAX   REBATES

Amounts deductible from the tax payable

2018

2017

Persons under 65

R13 635

R13 500

Persons 65 and under 75

R21 114

R20 907

Persons 75 and over

R23 607

R23 373

TAX   INTEREST EXEMPTION

 

2018

2017

Persons under 65

R23 800

R23 800

Persons 65 and over

R34 500

R34 500

DIVIDENDS TAX

 

Withholding tax is increased from 15% to 20% on all dividends declared from 1 March 2017.

MEDICAL DEDUCTIONS

As from 1 March 2017 the tax credit for contributions to medical schemes will be increased to rate of R303 (2017: R286) a month for the first 2 beneficiaries and R204 (2017: R192) for each additional beneficiary.

LEGAL ENTITIES

TAXATION

COMPANIES AND CLOSE CORPORATIONS

 

For years of assessment ending during the period:

1 April 2008 – 31 March 2017

28%

MICRO BUSINESS

MEDICAL DEDUCTIONS
Financial years ending on any date between 1 March 2017 and 28 February 2018.

Taxable turnover

Rates of tax

R            0 – R335 000

0 % of taxable turnover

R335 001 – R500 000

1% of taxable turnover above R335 000

R500 001 – R750 000

R1 650 + 2% of taxable turnover above R500 000

R750 001 +

R6 650 + 3% of taxable turnover above R750 000

 

TAXATION   SMALL BUSINESS CORPORATIONS

The annual turnover to qualify stayed constant at R20 million.

Small business income tax exemption threshold will increase from R75 000 to R75 750.

Years of assessment ending between 1 April 2017 and 31 March 2018

Taxable income

Rates of tax

R            0  –  R 75 750

Nil

R   75 751 – R365 000

7% of the amount over R75 750

R 365 001 – R550 000

R20 248 + 21% of the amount over R365 000

R 550 001 +

R59 098 + 28% of the amount over R550 000

Years of assessment ending between 1 April 2016 and 31 March 2017

Taxable income

Rates of tax

R            0 – R  75 000

Nil

R  75 001 – R365 000

7% of the amount over R75 000

R365 001 – R550 000

R20 300 + 21% of the amount over R365 000

R550 001 +

R59 150 + 28 % of the amount over R550 000

TAXATION   TRUSTS

Taxable income

2018

            2017

All taxable income

45 %

              41%

OTHER TAXES

VAT

The VAT system comprises of three types of supplies:

 

Rate

Standard rated supplies

14%

Zero-rates supplies

0%

Exempt supplies

exempt

CAPITAL GAINS TAX

Inclusion rates:

Inclusion rate

Max effective rate

Individuals and special trusts

40%

18.0%

Companies

80%

22.4%

Trusts

80%

36.0%

Annual exclusions and rebates:

2018

2017

Individual and special trusts

R40 000

R40 000

Individuals in the year of death

R300 000

R300 000

Primary residence exclusion

R2 000 000

R2 000 000

Disposal of a small business when a person is 55 years or older

R1 800 000

R1 800 000

TRANSFER DUTY

This is payable by all natural persons and legal entities on immovable property on or after
1 March 2017 – 28 February 2018.

Property value

Rates of tax

R                 0 – R     900 000

0%

R     900 001 – R  1 250 000

3% on the value above R900 000

R  1 250 001 – R  1 750 000

R10 500 + 6% on the value above R1 250 000

R  1 750 001 – R  2 250 000

R40 500 + 8% on the value above R1 750 000

R  2 250 001 – R10 000 000

R80 500 + 11% on the value above R2 250 000

R10 000 001 +

R933 000 + 13% of the value exceeding R10 000 000

This is payable by all natural persons and legal entities on immovable property on or after
1 March 2016 – 28 February 2017

Property value

Rates of tax

R                 0 – R     750 000

0%

R     750 001 – R  1 250 000

3% on the value above R750 000

R  1 250 001 – R  1 750 000

R15 000 + 6% on the value above R1 250 000

R  1 750 001 – R  2 250 000

R45 000 + 8% on the value above R1 750 000

R  2 250 001 – R10 000 000

R85 000 + 11% on the value above R2 250 000

R10 000 000 +

R937 500 + 13% on the value exceeding R10 000 000

DONATIONS TAX

Donations tax is payable at a rate of 20% on the value of any gratuitous disposal of property, by any resident individual or private company that is incorporated, managed or controlled in South Africa. The tax is payable 3 months after the date of the donation.

There is an annual exemption for natural persons of R100 000.

 

ESTATE DUTY
Estate duty is currently at a rate of 20%.

The first R3 500 000 is exempt from the tax.

EXCISE DUTIES

The excise duty on most excisable products is levied in the form of a specific duty which is based on the quantity or volume consumed. In general terms, it has become established practice to adjust excise duties annually. Excise duties have therefore been increased across the board as follows:

Packet of 20 cigarettes R1.06
340ml can of beer 12c
750ml bottle of wine 26c
750ml bottle of spirits R4.43
Petrol / diesel 30c per litre as from 5 April 2017
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