Finance Minister Enoch Godongwana’s 2023 budget speech welcomed some tax relief and incentives, which he believes strikes a critical balance between saving lives and livelihoods, whilst supporting the economic growth of the country.

With the energy crisis being the focus this year, the news was welcomed of a tax incentive for the installation of rooftop solar panels, which will help ease the impact of load shedding on households, businesses and the economy.  From 1 March 2023, individuals will be able to claim a rebate of 25% of the cost of the panels, up to a maximum of R15 000. This incentive will be available for one year but has strict terms and conditions to comply with. To find out more on this, see the SARS guide.

Businesses will now be able to deduct 125% of the cost of wind, solar, hydropower and biomass projects in the first year, for renewable energy brought into use during a period of two years from 1 March 2023.

Some much-needed tax relief bailouts to struggling enterprises this year included :

  • Eskom of R254 billion
  • SAA of R1 billion
  • SA Post Office of R2.4 billion

Some of the 2023 Budget Speech tax changes that will affect your pocket are:

Personal Tax Rates

Individuals will only pay income tax if they earn more than R95 750 per annum.

Personal income tax brackets will only be increased according to the predicted inflation rate of 4.5%.

  • If you’re a taxpayer under 65 years: your tax-free threshold increased to R95 750 from R91 250.
  • If you’re a taxpayer between 65 and 75 years of age: your first R148 217 is tax-free. Increased from R141 250.
  • If you’re a taxpayer over 75: your tax-free threshold increased to R165 690 from R157 900.

Medical Tax-Credit

Medical tax credits will increase from R347 to R364 per month for the first two members, and from R234 to R246 per month for additional members.

Small Business Tax

From 1 April 2023, Corporate Tax will be reduced to 27% for companies with years of assessments ending after 31 March 2023.

Retirement Tax

The retirement tax tables for lump sums withdrawn before retirement, and for lump sums withdrawn at retirement, will be adjusted upwards by 10%. This means that the tax-free amount that can be withdrawn at retirement increases to R550,000. A two-pot retirement system was announced, which will include the amount that could be immediately available when the system is implemented from 1 March 2024.

Sin taxes

Although a sugar tax increase has been delayed until 1 April 2025, taxes or excise duties on alcohol and cigarettes were increased by an average of 4.9%, in line with inflation

  • 340ml can of beer will increase by 10c
  • 750ml of spirits will increase R3.90
  • A pack of cigarettes will increase by 98c

Other welcoming changes include:

  • Social grants have increased slightly below inflation with the Covid-19 Social Relief grant being extended until 31 March 2024.
  • The brackets of the transfer duty table will also be increased by 10%, allowing properties below R1.1 million to avoid any transfer duty payments.
  • The research and development tax incentive will be extended for 10 years and will be refined to make it simpler and more effective.
  • The urban development zone tax incentive will also be extended by two years

What hasn’t changed?

  • Fuel levy
  • Capital Gains Tax
  • Donations Tax
  • Estate Duty Tax
  • Dividends Tax
  • UIF
  • Skills Development Levy
  • Interest Exemption
  • International Travel Tax

These points are just a brief summary of the budget speech proposals, but they are not yet legislated and may be subject to further changes.

Consider the experts

Dirmeik Consulting has an extensive understanding of the latest tax laws, rules and regulations and can advise you effectively on all your tax matters. Our experts will endeavour to create the best solution for you and your business, so don’t delay in getting in touch with us.