Each year around this time, business owners and individuals alike closely watch the budget speech to see what financial changes will be implemented and how this will affect their business or industry. While the budget speech is packed with valuable information to those in the know, for the average person this treasure trove of financial info is lost between terms like “fiscal drag” and “budget deficit”. If you are one of these people then you may find this article worth reading. We will highlight some of the interesting points affecting everything from income tax brackets to changes in property transfer duty. We also have a handy tax guide which you can download here which contains everything in more detail.
For a lot of people, one of the main points of interest from SA Finance Minister Pravin Gordhan’s speech is taxation relating to income. As an individual, you will be glad to hear that Gordhan has announced tax relief of R8.1 billion in order to counteract the effects of inflation pushing individuals into higher tax brackets. In the tax year 2011/2012 (Starting March2011), if you are under 65 years of age, then you will only need to pay tax if your income is above R59 750. If you are 65 or older, you are only required to pay tax if you earn over R93 150.
If you are planning on buying property, there have been a few changes in the payment of transfer duty. The transfer duty exemption has been raised from R500 000 to R600 000 and the percent payable on larger property is as follows:
R600 001 – R1 000 000: 3% of the value above R600 000.
R1 000 001 – R1 500 000: R12 000 plus 5% of the value above R1 000 000
R1 500 001 and above: R37 000 plus 8% of the value above R1 500 000
If you have property or any other investments that produce interest, you will be happy to know that there has been an increase in the annual tax-free interest income. This has been raised to R22 800 for individuals below 65 and to R33 000 for individuals 65 years and older.
Planning on retiring soon? The tax-free lump sum benefit will increase from R300 000 to R315 000. Also those planning for retirement stand to benefit as from March 2012, employees will be allowed to deduct up to 22.5% of taxable income for contributions to their approved retirement funds (up to a maximum or R200 000 per year). Also an employer’s contribution to an employee’s retirement will be regarded as a taxable fringe benefit.
Everything has been fairly positive up to now but brace yourself for the bad news. If you indulge in cigarettes or alcohol then you may feel a bit of a pinch. Cigarettes are going to increase by 80 cents per packet while a bottle of wine will increase by 13.5 cents, a beer by 6.4 cents and a bottle of spirits by R2.86.
If you own a car and thought the recent oil price hike was bad, get ready for another increase. On April 6, the fuel levy will increase by 10 cents per litre on petrol and diesel, and the Road Accident Fund levy will be increased by 8 cents per litre.
In our finance minister’s budget speech in 2010, he announced the voluntary disclosure programme (VDP) which is still running until October this year. The VDP offers a window of opportunity for individuals and businesses to disclose and regularise their tax and or exchange affairs. If tax payments are not in order, this is an ideal opportunity to straighten them out and avoid any possible penalties or even criminal prosecution. If you are concerned about your tax situation, we can be of assistance. Simply call us on 021 421 4444.
We hope you found this article helpful and it shed light on some of the changes which may affect you this coming year. If you missed the link at the beginning of the article for our pocket tax guide, you can download it here: https://www.dirmeik.co.za/downloads/DirmeikConsultingTaxGuide.pdf .