Earlier today, Finance Minister Pravin Gordhan tabled South Africa´s national budget for 2017/18 in Parliament.
Download PSG´s 2017/18 Budget summary
We have prepared a summary of key budget provisions and highlights, as well as an infographic, which you can download using the links below:
The proposed new tax table provides minimal relief against inflation and introduces a new tax bracket at 45% for taxpayers earning above R1 500 000.
|Individuals and special trusts
|Taxable income (R)
||Rate of tax
|0 - R189 880
||18% of taxable income
|R189 881 - R296 540
||R34 178 + 26% of taxable
income above R189 880
|R296 541 - R410 460
||R61 910 + 31% of taxable
income above R296 540
|R410 461 - R555 600
||R97 225 + 36% of taxable
income above R410 460
|R555 601 - R708 310
||R149 475 + 39% of taxable
income above R555 600
|R708 311 - R1 500 000
||R209 032 + 41% of taxable
income above R708 310
|R1 500 001 and above
||R533 625 + 45% of taxable
income above R1 500 000
All rebates are increased slightly. The primary rebate is R13 635, the secondary rebate for taxpayers older than 65 is R7 479 and the tertiary rebate for taxpayers older than 75 is an additional R2 493. This means that the tax threshold has increased to R75 750 for people younger than 65, R117 300 for those older than 65 and R131 150 for taxpayers older than 75.
Dividend tax and interest exemption
Dividend tax increases to 20%. The interest exemption remains R23 800 for taxpayers younger than 65, and R34 500 for taxpayers aged 65 and older.
Capital gains tax (CGT)
Capital gains inclusion rates remain at 40% for natural persons and 80% for companies and trusts. This means the maximum CGT rates are:
|Natural persons and special trusts
The annual exclusion remains R40 000 and the exclusion at death R300 000.
Exemption of foreign remuneration
If a South African resident works in a foreign country for more than 183 days a year, their foreign remuneration is exempt from tax. This exemption will be changed so that the remuneration is only exempt if taxed in the foreign country.
Small changes were made to the tax brackets of small business corporations, while the tax rates of other companies remained the same.
Transfer duty rates that apply to property acquired on or after 1 March 2017 by any person (including companies, close corporations or trusts) are as follows:
|Transfer duty rates
|Value of property
||Rate of tax
|0 - R900 000
|R900 001 - R1 250 000
||3% on the value above
R900 000 but not exceeding
R1 250 000
|R1 250 001 - R1 750 000
||R10 500 plus 6% on the value
above R1 250 000 but not
exceeding R1 750 000
|R1 750 001 - R2 250 000
||R40 500 plus 8% on the value
above R 1 750 000 but not
exceeding R2 250 000
|R2 250 001 - R10 000 000
||R80 500 plus 11% on the
value above R2 250 000 but
not exceeding 10 000 000
|R10 000 001 and above
||R933 000 plus 13% on the
value exceeding R10 000 000
“New income tax bracket at 45% for taxpayers earning above R1 500 000.”
Trusts, other than special trusts, will be taxed at a flat rate of 45%.
Medical tax credits
The tax credit for the first two dependants increases to R303, and for additional dependants it increases to R204. When the National Health Insurance plan is rolled out, these tax credits will be cancelled.
Retirement fund changes
No changes were made to the lump sum rates upon withdrawal or retirement. In future, retirees will be allowed to transfer their funds to another retirement fund instead of purchasing a life annuity or living annuity.
Taxpayers will be able to deduct contributions to any retirement fund up to a maximum of 27.5% of the greater of remuneration for PAYE purposes or taxable income (both excluding retirement fund lump sums and severance benefits). The deduction is capped at R350 000.
Tax free savings accounts
The maximum annual contribution to tax free savings accounts is increased to R33 000 p.a.
The daily subsistence allowance increases to R397 for meals and incidental costs, and R122 for incidental costs only.
The vehicle value brackets have been adjusted, with concurrent adjustments to the deductible fixed costs, fuel and maintenance costs.
Duties and levies
Excise duties and levies are increased as follows from 1 March 2017:
- Whisky: increases by R4.43 per bottle
- Beer: increases by 11.9c per can
- Wine: increases by 30c per litre
- Cigarettes: increases by 106c per packet of 20
- Fuel levy: increased by 30c per litre
- Road Accident Fund levy: increases by 9c per litre
The proposed sugar tax will be introduced later this year at 2.1c per gram of sugar in excess of 4 grams per 100ml once legislation has been promulgated.
Estate duty and donations
Estate duty as well as donations tax remain at 20%. The difference between the official interest rate and the interest rate charged on loans to trusts will be subject to donations tax.
“The maximum annual contribution to tax free savings accounts is increased to R33 000 p.a.”
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