With official emigration having been phased out in 2021, SARS new tax clearance application processes for foreign investment and emigration allowances now treats all South African individuals the same, regardless of where they live.

This consolidated change is that the new ‘Approval of International Transfer (AIT)’ replaces both the previous ‘Emigration’ and ‘Foreign Investment Allowance (FIA)’ application types, which can conveniently still be applied for via e-Filing.  As part of the AIT, the following information will be required by SARS:

• Statements of assets and liabilities must be split between foreign and local
• Tax status (resident or non-resident)
• Are you a beneficiary of a trust (foreign or local)
• Do you have a shareholding (directly or indirectly) in any legal entity of 20% or more (foreign or local)
• Have you made a loan/s to a trust (local or foreign)

For more details on the supporting documents that will be needed, see SARS link here.

Previously, the FIA (R10 million limit) required the completion of a SARS FIA001 Form that would generate a TCS (Tax Compliance Status) PIN for foreign investment. Emigrants followed a similar process, but was issued a TCS PIN for emigration. This has now been consolidated into an enhanced single clearance process, namely the AIT, which aims to dramatically improve turnaround times for taxpayers, provided they are already compliant.

However, these changes only apply to the tax clearance process, with no changes being made on the Exchange Control side. The allowances applicable to South African resident individuals, as well as those who have ceased to be residents for tax purposes (emigrants) remain unchanged, and can be summarised as follows:

• The current R1 million Single Discretionary Allowance limit is still available yearly to all South African resident individuals, 18 years and older, who wish to transfer money abroad, and does not require a Tax Compliance PIN. However, this is only available to emigrants in the calendar year when they leave South Africa. Any further capital transfers for residents or emigrants above R1 million require tax clearance in terms of the AIT process.  For applications in excess of R10 million, SARB approval will be required.

In conclusion, this new process applies to new applications for foreign investment and emigration, and does not have any impact on tax clearances that have already been issued. Taxpayers are well advised that whilst SARS have made the process easier to apply, there is a strengthened and technology compliance enabled backend, which is best navigated through an experienced Tax Consultant, like ourselves. We, at Dirmeik Consulting can easily assist clients with this new tax clearance process, whether you are transferring or taking money abroad.  We are also able to successfully have you coded as a non-resident tax-payer with SARS, should you choose to emigrate.  Contact us today to find out how we can assist you.

The post SARS Changes to Foreign Investment & Emigration Explained appeared first on Dirmeik Consulting.

You know the kind of bump in the road we’re talking about – when your car needs expensive repairs, unforeseen medical costs, or a global pandemic such as COVID-19. By cushioning for these kinds of unexpected events, you won’t face financial disaster, not to mention being able to provide you with a greater sense of financial freedom.

The COVID-19 pandemic has hit everyone one way or another with varying financial implications. As everyone still needs to continue paying tax, we want to try to help you minimise the amount of tax you pay and help improve your financial situation.

Tax Recovery and Savings 

Proper tax planning should be part of your financial and investment strategy. Get savvy with your tax returns. Here’s how to reduce your taxable income and save more money.

SALARY SACRIFICING

Salary sacrificing is an arrangement between employer and employee where the employer agrees to forgo part of the employee’s salary in exchange for other benefits, such as contributions to benefit funds, medical aid, or travel allowances. This then reduces the amount of tax you must pay. What happens is you forgo part of your pre-tax salary before you receive it, and these benefits can save you thousands a year in tax.

KEEP AN EYE ON YOUR TAXES

Regularly keeping things on track can be a bit of an adjustment for some of us, as not everyone is good at admin. However, it will pay off in the long run, so be prepared to keep good tax records by documenting everything. If you need to make tax deduction claims, keep all your receipts. Luckily, nowadays, you can even find an app, like Expensify or NeatDesk, that will make these procedures a lot easier. Set aside some time each week to load your receipts onto your app so that tax season will be a breeze.

CLAIM ALL DEDUCTIONS

As a freelancer, independent contractor, or a commission earner, do you know all the deductions you are allowed to claim on your tax? Using these is a great way to minimise your taxable income, so make sure to claim all legitimate work-related deductions. All expenses incurred in the production of income can be claimed in terms of s11(a) of the South African Income Tax Act. For example, but not limited to, purchase of IT equipment, industry-specific books, and training, vehicle and travel expenses – including meals and accommodation, and home office expenses.

 Due to the COVID-19 pandemic and lockdown, many of us have been forced to work-from-home over the past months, and some employers have even made the decision to keep employees working from home on a more permanent basis in the long-term – with this in mind, it’s important to understand how this will affect your tax deductions.

If a salaried employee has spent more than 50% of aggregate working hours in the 2021 year of assessment (12 months ending 28 February 2021) working from home, they qualify for a tax deduction for expenses incurred to maintain their home office and equipment. This tax deduction is subject to further criteria that your tax consultant will need to confirm with you.

Be sure to let us know if you think you may be eligible for this tax deduction and keep any supporting documentation handy, as SARS often requests it as proof – copies of invoices, statements and relevant calculations are key.

DONATE TO CHARITY

If this is something that tugs at your heart, then donating to your favourite registered charity is one way to reduce your taxable income. You can give up to 10% of your taxable income to a registered public benefit organisation (with a PBO s18A income tax certificate) and claim a tax deduction on this donation. Donations are subtracted from your taxable income, giving you a percentage back.

MEDICAL AID TAX CREDIT

Taxpayers are entitled to a monthly tax rebate in respect of any medical scheme contributions made for the benefit of themselves and their dependents, and an additional rebate is available for out-of-pocket medical expenses incurred by individual taxpayers, with the amount reflecting on your medical tax certificate and any additional amounts over and above this.

Medical & Disability Expenses

All taxpayers are entitled to a monthly ‘tax rebate’ (i.e. credit) in respect of any medical scheme contributions made for the benefit of themselves and their dependents as follows:

2021
Taxpayer = R319
First dependant = R319
Per additional dependant = R215

For additional (e.g. out-of-pocket) medical expenses incurred by individual taxpayers, a tax rebate is available as follows:

• Where the taxpayer is 65 and older or where the taxpayer, taxpayers’ spouse, or child is a person with a disability. 33.3% of the value of the amount by which the aggregate of the medical scheme fees that exceed 3 x the standard medical scheme credits, and all qualifying expenses (other than medical scheme contributions)
  
• Other taxpayers: 25% of the value of the amount by which the aggregate of the medical scheme fees that exceed 4 x the standard medical scheme credits, and all qualifying medical expenses (other than medical scheme contributions), exceed 7.5% of the taxpayer’s taxable income (excluding any retirement fund lump sum benefit, retirement fund lump sum withdrawal benefit and severance benefit including capital gains).

RETIREMENT ACCOUNTS

Contributing the maximum amount to your retirement account is a good strategy for tax minimisation. By doing so, you can deduct up to 27.5% of your gross remuneration or taxable income – whichever is higher – in respect of your total contributions. This is subject to an annual limit of R350 000.

Deductions
(Contributions to pension, provident and retirement annuity funds)

From 1 March 2016 onwards, the tax deduction calculation for the three different funds, pension, provident, and retirement annuity funds will be limited to:

27.5% of the greater of (limit of R350 000 per year):

1. ‘taxable income’ (excluding any lump sum benefits or severance benefits) but before the donation’s deduction.

2. ‘remuneration’ (excluding any lump sum benefits or severance benefits).

The above deduction is, however, limited to taxable income before this deduction and before any taxable capital gain.

Excess contributions not allowed as deductions are carried forward to the following year of assessment. Contributions made by employers on behalf of employees would be a taxable fringe benefit in the hands of the employees but will also be regarded as a contribution made by the employee, therefore deductible in the hands of the employee subject to the above limitations.

TAX-FREE SAVINGS ACCOUNTS

If you didn’t know about this option, it’s a winner. SARS allows taxpayers to save a maximum of R33 000 per year and R500 000 in your lifetime tax-free. Once put into the specially designated account, you won’t have to pay tax on capital gains or interest received on these investments.

Tax-Free Investments

Any amount received from a tax-free investment is exempt from normal tax (this includes income on the investment as well as any profits arising on disposal of the investment). The following requirements must be met:

• The investment must be owned by a natural person or the deceased or insolvent estate of a natural person
• The investment must be a financial instrument or policy that is administered by any person or entity designated by the Minister of Finance.
• Contributions to the investment must be made in cash and are limited to R36 000 (R33 000 before 1 March 2020) per year and R500 000 in total (both in aggregate)
  

In the event where the R36 000 and R500 000 limits are exceeded, 40% of the excess investment is treated as normal tax payable (the income on the excess part of the investment is, however, still tax-free).

If a serious savings plan is not part of your financial repertoire, it is something we encourage you to start as soon as you can. Saving for the unexpected makes sense.

If you require any further guidance on getting to a better tax position in 2021, get in touch with us at Dirmeik Consulting as soon as possible.

The post Tax Recovery Post-COVID-19 appeared first on Dirmeik Consulting.

One such emergency relief measure is Provisional Tax Payment Relief for 2021, where provisional taxpayers only have to pay 65% of their tax liabilities in the current tax year. This measure is aimed at assisting qualifying taxpayers with small to medium-sized businesses – individuals, companies, and trusts (including micro-businesses) – to help alleviate cash flow problems they may be experiencing.

“Allowing for deferred payment of provisional liabilities should assist these businesses by providing additional cash flow during the crisis. This could be the difference between pushing a small or medium-sized business into liquidation or providing some space for the business to get through the crisis and add to the economic recovery, hopefully being a source of higher tax revenue in the medium term,” Treasury said.

How Will This Affect Provisional Taxpayers?

The relief measures, intended to counter the adverse impact of the COVID-19 pandemic, will come by way of deferment of your first and second provisional tax payments should your cash flow warrant that you need deferments. This will run for payments that have to be made from 1 April 2020 to 1 April 2021.

Provisional taxpayers will now only have to pay 15% of the estimated total tax liability for their first tax payment, payable by 31 August 2020, and the second payment, payable by 28 February 2021, will be based on 65% of the estimated total tax liability. The outstanding amount must be paid by 30 September 2021 (or six months after a company’s financial year-end), to avoid interest charges.

SARS is not making any changes to the way the provisional tax system works. Nothing has changed in terms of how your payments need to be calculated, this is business as usual – the submission of provisional tax will be filed in exactly the same way as it has always been.

So, that means, Dirmeik Consulting will still submit the full amount due, the only difference now is that the payment will be reduced in accordance with the published deferred payment rules.

What You Need to Know

• You need to advise us what your situation is, with regards to your income for provisional tax purposes and your cash flow position. We will need to know this well before we start the process, so that we can determine your submission and payment.
• If your business income has reduced because of COVID-19 we must take this into account in the provisional tax calculations.
• We will be tracking the provisional tax payments so we can advise you when payments fall due. Keep us informed as to what payments you have made so that we can keep our records up to date.
• Where you have claimed the COVID-19 relief, we will communicate with you by the time it comes to the third provisional or top-up payment.
• If you are unable to pay any taxes owing to SARS, please advise us so that we can make the necessary application to SARS on your behalf.

The Basic COVID-19 Relief Measures Rules

• The company/business’ turnover must not be greater than R100 million.
• The company/business must be tax compliant (no outstanding tax returns and all tax payments are up to date).
• For an individual or trust, passive income (rent, interest, dividends, etc.) cannot be more than 20% of total income.
• The taxpayer must be able to prove substantial and material financial hardship due to COVID-19.
• In the event that the relief is claimed, and the taxpayer is not tax compliant then the normal penalties and interest will kick in on the deferred payments.

The Official Rules from SARS

• Deferral of a portion of the payment of the first and second provisional tax liability to SARS, without SARS imposing penalties and interest for the late payment of the deferred amount.
• The first provisional tax payments due from 1 April 2020 to 30 September 2020 will be based on 15% of the estimated total tax liability, while the second provisional tax payments due from 1 April 2020 to 31 March 2021 will be based on 65% of the estimated total tax liability (after deducting the 15% payment amount received from the First period).
• Provisional taxpayers with deferred payments will be required to pay the remaining 35% tax liability when making the third provisional tax payment, in order to avoid interest charges on assessment.

If you require any further guidance on the new rules or how your business can claim for payment relief measures, get in touch with us at Dirmeik Consulting as soon as possible.

The post What to Know about the Payment Relief Measures for Provisional Taxpayers appeared first on Dirmeik Consulting.

The formula to calculate your base tax liability is simple:

Base Tax Liability = (Total annual income x tax bracket percent ) + additional tax payment if applicable – tax rebate

Therefore to calculate your tax liability using this formula, you need to know your total annual income, the percentage tax charged on the tax bracket you fall under, whether there is an additional payment on this tax bracket and finally the tax rebate you quality for.

To calculate your total annual income, multiply the amount you earn in a month by 12, e.g. if you earn R20 000 per month, your total annual income will be R20 000 x 12 = R240 000

To find your tax bracket percentage, refer to the tax tables below. If you earn an annual income of R240 000, you will fall into the tax bracket of R195 851 – R305 850 which carries with it a tax percentage of 26% and an additional tax payment of R35 253.

If you consult the tax rebate table below, depending on your age you will find the amount that you can deduct from your total tax. e.g. if you are under 65 and earn R240 000 per year, you will quality for a rebate of R14 220.

Therefore your base liability is: (R240 000 x 0.26) + R35 253 – R14 220 = R83 433

This means that the tax you would owe each month over a year would be R83 433 / 12 = R6952.75

Remember that this is your base tax liability. The amount of tax you are liable for can be reduced further depending on how much you have spent on medical aid, RA contributions and more. To work out your final tax liability, contact Dirmeik Consulting today, we are here to handle all of your tax requirements.

Lastly, note the tax thresholds tables below. If you earn less than the amounts listed there based on your age, you are likely not eligible to pay any tax.

Personal Income Tax Tables 2019

The taxable income brackets for the period 2019 to 2020 have not been adjusted to match inflation and have therefore not changed since last year. The tax thresholds have however been adjusted slightly which means that you need to earn slightly more than last year to be eligible to pay tax.

Income tax brackets for the period 1 March 2019 to 29 February 2019

Tax Rebates 2019-2020

Tax Thresholds 2019 – 2020

Comparative Tax Rates

* Estates and cumulative donations in excess of R30 million will be taxed at 25%

Annual Income Tax Tables

The tables above will allow you to calculate your tax liability for the period March 2019 to February 2020. For previous years, access the appropriate tax tables below:

Income Tax Rates 2018/2019

Income Tax Rates 2017/2018

Income Tax Rates 2016/2017

Income Tax Rates 2015/2016

Income Tax Rates 2014/2015

Income Tax Rates 2013/2014

Income Tax Rates 2012/2013

Download tax tables

If you would like to download these tax tables as well as other useful tax info for this tax period in a handy pocket guide, access the following link: Download the Free Tax Guide 2019/2020.

Need help calculating your tax liability?

Tax can be confusing and if the numbers are not making sense to you, why not reach out and allow us to assist you with your tax liability. Our service offering is really ‘more than just numbers’ as we also provide you with sound advice backed by friendly, efficient service.

Call us on:
Johannesburg: 010 007 3026,
Cape Town: 021 421 4444,
Durban: 031 007 0881

The post Tax Calculator – Income Tax Tables 2019 appeared first on Dirmeik Consulting.

What is my taxable income?

Your taxable income is not necessarily a tax you are only liable to pay on a salary or wage. You may also be liable for paying income tax to SARS if you receive remuneration from:

• Additional employment-related benefits such taxable fringe or lump sum benefits, overtime pay, certain lump sump benefits, etc
• Income received from renting property
• Pension-related income
• Annuity-related income
• Specific capital gains
• Profits from a business
• Income or benefits from a trust
• Dividends from investments
• Fees arising from a directorship
• …and more.

Any of these combine together to form your taxable income.

Personal Income Tax Tables 2018

With the taxable income you have earned over the period of the year, use the tables below to find the tax bracket you fall under:

Income tax brackets for the period 1 March 2018 to 28 Feb 2019

Tax Rebates 2018-2019

Tax Thresholds 2018 – 2019

Comparative Tax Rates

Tax Tables for each year

If you are calculating your tax liability for any period other than March 2018 to February 2019, access the relevant tax tables below from previous years:

Income Tax Rates 2017/2018

Income Tax Rates 2016/2017

Income Tax Rates 2015/2016

Income Tax Rates 2014/2015

Income Tax Rates 2013/2014

Income Tax Rates 2012/2013

Download tax tables

We are offering a free booklet for download in order to access the tax tables offline: Download the Free Tax Guide 2018/2019.

Need help calculating your tax liability?

If you find tax confusing or feel there is just not enough time in the day, Dirmeik Consulting can assist you in everything tax related.

Call us on:
Johannesburg: 010 007 3026,
Cape Town: 021 421 4444,
Durban: 031 007 0881

The post SARS – Rates of Tax for Individuals appeared first on Dirmeik Consulting.

To get you up to speed with the changes, we have put together the highlights that we feel may be of interest to you as an individual:

VAT increase

Value Added Tax will increase to a rate of 15%. This will take effect from April 1st 2018.

VAT has been steady at 14% since 1993 and the hike brings concerns about its impact on poor households. To limit this, there is a current zero-rating on basic foodstuffs that will remain in place. This covers rice, brown bread, and maize meal.

There will also be an above average increase in social grants for affected households.

Income tax – no inflation adjustment

There has been no inflation adjustment for the top four wealthiest tax brackets. This means that if you earn more than R410,461 per year, you will be taking home less pay.

The bottom three personal income tax brackets will be partially adjusted for inflation with a 3.1% increase. This also includes the primary, secondary and tertiary rebates.

Estate Duty hike

The rise in estate duty is being seen by some as a wealth tax. Estate duty has been a level 20% for all estates however with the latest change, estates above R30 million will be charged 25%.

Capital Gains / Dividend Taxes unchanged

Both capital gains tax and dividends tax will remain unchanged. The capital gains tax rate for individuals remains at 18% while the dividends tax rate holds at 20%.

Fuel Levy increases

After a 30c/litre hike last year, an increase of 52c/litre is on the cards. This consists of a 22c/litre increase in the general fuel levy and an increase of 30c/litre for the Road Accident Fund levy.

Luxury goods taxed more

Luxury goods will be receiving higher ad valorem tax rates. These items include cars, cosmetics, electronics and cell phones.

A lot of these products will see the tax rate rise from 7% to 9% while on cars, the maximum rate will be boosted from 25% to 30%.

Sin tax increase

With the increases for sin tax, you can expect to pay between 6% and 10% more for alcoholic products while smokers will have to fork out 8.5% more for tobacco products.

Sugar taxes

From April 1st 2018, a health promotion levy which taxes sugary beverages will be implemented. This aims to control the high obesity rate in South Africa by reducing sugar consumption. Sugary beverages with more than 4 grams of sugar per 100ml will be taxed 2.1c per gram of sugar per 100ml.

Carbon Taxes

The Carbon Tax Bill will be implemented from January 1 2019.

Social grant increases

The increases in social grants are detailed below:

• State old age grant increases from R1 600/month to R1 695.
• State old age grant for over 75s increases from R1 621 to R1 715.
• War veterans grant increases from R1 620 to R1 715.
• Disability grants increase from R 1 600 to R1 695.
• The foster care grant increases from R920 to R960.
• The child care dependency grant increases from R1 600 tot R1 695.
• The child support grant increases from R380 to R405.

Education

Funding has been put in place for fee-free higher education and training for poor students. New first-year students at universities and TVET colleges will be funded for the full cost of their study for the 2018 academic year if their family income is below R350 000 per annum.

Drought provisions

Government has allocated R6 billion to address the drought situation in the Western Cape, Eastern Cape and Northern Cape. This money will be used to augment water infrastructure with a special focus on Cape Town due to the concern of job losses in the agricultural sector.

Offshore investments

The prudential limits on offshore investments for funds under management by institutional investors is set to increase by five percentage points for all categories‚ including the allowance for investments in Africa.

There will be a rise on the limits for collective investment schemes‚ investment managers and long-term insurers of 40% from 35%; and for non-linked long-term insurers and retirement funds to 30% from 25%.

Unsure about how these changes may affect you or your business? Contact Dirmeik Consulting on:

Cape Town: 021 421 4444,
Johannesburg: 010 007 3026,
Durban: 031 007 0881

The post Budget 2018 – Highlights appeared first on Dirmeik Consulting.

Currently there are two standard methods for calculating PAYE, namely: Averaging/Annual and Periodic

We will be working with the averaging method whereby an employee’s annual total income for the entire tax year to date is used to calculate their PAYE liability. This method is often more accurate in cases where an employee has variable income.

How to calculate PAYE

1. Work out your employee’s gross or total annual salary before deductions and including benefits:
   • In the case of fixed salaries, this is simple:
     Total monthly salary X 12
   • In the case of variable income, use a calculation to estimate the annual total income, e.g. If your employee has earned R10 000 in March, R12 000 in April and now R15 000 in May, you would add all amounts together, divide by the number of months you have figures for – in this case 3 – and multiply by 12 months in the year to receive an estimated total annual income:
     ((Add total monthly remunerations amounts to date) / number of remuneration amounts ) x 12
2. Factor in deductions such as:
   • Contributions to RAF, pension or provident funds:
     Total Monthly RAF or pension or provident fund contributions x 12
     This deduction is limited to 27.5% of the employee’s total income. The ceiling is set at R350 000 for high incomes.
   • Travel allowance:
     (Total Monthly travel allowance x 12) x 20%
     As an employer, you need to decide if your employee travels at least 80% of the time for their work. If they do not, 80% of the travel allowance is charged PAYE. If they do, only 20% of the travel allowance is charged for PAYE. In the example above, the employee does not travel more than 80% of the time for their job, therefore only 20% of the travel allowance can be used as a deduction.
3. Note the age of the employee to determine their tax rebate:
   • Are they under 65?
   • Are they 65 – 75?
   • Are they over 75

   Reference the PAYE tables here for the 2017/2018 tax year.

4. Calculate the PAYE that should be paid by following the steps below and using your totals from each section above:
   • Taxable income = Total Annual Salary – (RAF or pension or provident fund deductions + travel allowance deductions)
   • View the tax thresholds here
     If the taxable income is below the tax thresholds, no PAYE is deductible. If the taxable income is above the thresholds, continue on.
   • View the PAYE statutory rates here
     Find out which tax bracket your employee’s taxable income falls into and work out the total tax payable.
   • View the tax rebates here and work out the rebates your employee is eligible for based on their age.
   • Finally calculate the PAYE your employee needs to submit for the month:
     PAYE = (Total tax payable – total rebates) / 12

This may seem like a lot to consider, but is fairly simple. Let’s look at an example:

Sipho is 29 years old and in 2017/2018 tax year earns a fixed monthly salary of R20 000. His provident fund contributions total R2000 per month and he receives a R1000 monthly travel allowance. He only travels approximately 15% of the total time he works.

Sipho’s annual income is: R20 000 x 12 = R240 000

His deductions are:

Total Provident fund contributions: R2 000 x 12 = R24 000
This is under 27.5% of his total income and also under the R350 000 limit so the full amount of R24 000 can be used as a deduction.

Total travel allowance deductions: (R1 000 x 12) x 20% = R2 400.

Therefore, his total deductions are R24 000 + R2 400 = R26 400.

His total taxable income is: R240 000 – R26 400 = R213 600

When reviewing the PAYE tables here for 2017/2018 we can see that Sipho is above the tax thresholds and will need to have PAYE deducted from his earnings.

Being under 65, he qualifies for a tax rebate of R13 635.

His total taxable income of R213 600 puts him in a tax bracket of R189 881 – R296 540 which means that he will need to pay R34 178 + 26% of the amount above R189 880 which equals R40 345.20.

We can therefore calculate the monthly PAYE as: (R40 345.20 – R13 635) / 12 = R2 225.85

Disclaimer:

There are a host of possible deductions that a taxpayer may qualify for and are beyond the scope of the simple calculation steps above which are intended as a guide only. The calculation methods above may not apply to all circumstances, for example where an employee is in non-standard employ or has received a tax-directive from SARS. Lastly, scenarios such as pro-rata tax calculations where an employee has only been employed for part of the month have also not been factored in above to keep the general steps as simple as possible. We recommend that you consult with a tax practitioner who can verify that PAYE is being calculated accurately and take into consideration the employee’s unique circumstances.

Should you need assistance with PAYE processing for your business, contact Dirmeik Consulting on:

Cape Town: 021 421 4444,
Johannesburg: 010 007 3026,
Durban: 031 007 0881

The post PAYE calculator appeared first on Dirmeik Consulting.

PAYE Deductions

PAYE is not only applied to an employees salary and or commission but a number of other payments are also subject to PAYE. These include:

• 80% of any travel allowance ( This can be reduced to 20% if the employer feels the employee travels at least 80% of the time for business)
• Any remuneration that is paid to personal service providers or labour brokers
• Any payments made to directors of private companies with regards to services rendered (this includes directors of close corporations)
• Any annuities from Annuity Funds
• Any payments to PSP’s (Personal Service Providers)

PAYE Statutory Rates

Rebates

Tax rebates are amounts by which SARS will reduce the actual taxes owing based on certain conditions or circumstances.

Tax Thresholds

Tax Thresholds offer tax relief to low income earners and specify the ceilings for tax-free income.

Need Assistance with PAYE?

Should you need assistance with PAYE processing for your business, contact Dirmeik Consulting on:

Cape Town: 021 421 4444,
Johannesburg: 010 007 3026,
Durban: 031 007 0881

The post PAYE Tables 2017 appeared first on Dirmeik Consulting.

Retirement structure is based on three legs, namely exempt, exempt, and taxed. While saving for your retirement you are on the first ‘exempt’ leg where, as described above, you can deduct any retirement contributions being paid into a tax-incentivised retirement product from your taxable income – up to a certain limit.

While your investment grows, the second ‘exempt’ leg frees you from paying Capital Gains Tax, dividends withholding tax or income tax on the growth.

However, when you elect to retire, you enter the third leg which is ‘taxed’. This article will explain how tax is applied to retirement vehicles such as pension funds, pension preservation funds and/or retirement annuities.

Tax upon retirement

If you have been contributing to a pension fund, pension preservation fund or retirement fund, you are entitled to make a lump sum withdrawal on retirement.

The maximum amount that you are allowed to withdraw is equal to one-third of the retirement interest in your fund. If the total value of your fund is less than R247 500, then you are permitted to withdraw the full retirement interest amount as a lump sum.

Any lump sum that is withdrawn is subject to taxation:

After a one-third lump sum withdrawal, the remaining two-thirds of retirement interest is received by way of regular pension (annuity). This would be in the form of a monthly amount that you received from the annuity. If this monthly amount exceeds the tax threshold, you are liable to pay tax on the amount that is over the threshold limits which are:

For the 1 March 2017 to 28 February 2018 year of assessment for the tax season starting during 2018:
o Person below 65 – R75 750 per annum
o Person 65 and above but not yet 75 – R117 300
Person 75 and above – R131 150.

Retirement tax breaks

Despite being liable for tax on retirement, there are still tax breaks which you can enjoy as a pensioner:

• At retirement, you can withdraw up to R500 000 tax-free from your retirement savings
• While income from a retirement annuity is charged under income tax, the marginal tax rate that you are charged by SARS is usually lower than the rate you are charged while working.
• Any growth in your living annuity portfolio retirement is free from income tax, dividends withholding tax and Capital Gains Tax.
• There are tax rebates that apply to you as a pensioner in addition to the primary rebate that applies to all taxpayers.
• As a tax payer over 65, you are subject to medical tax credits which act as an additional rebate.

Should you have questions on these tax breaks or wish to consult with a knowledgeable tax consultant regarding tax and retirement, contact Dirmeik Consulting on:

Cape Town: 021 421 4444,
Johannesburg: 010 007 3026,
Durban: 031 007 0881

The post Tax considerations on retirement appeared first on Dirmeik Consulting.

Whilst stoically saving your hard earned money for the golden years is commendable, legislation is constantly changing and your retirement contributions should be adapting to these changes. In past years, retirement funds such as provident funds, retirement annuities and pension funds all had their own set of tax deductions and limitations. As of 1 March 2016 however, all types of retirement funds are now treated the same with regards to tax and may also provide you with significant opportunities to save on tax.

Instead of having to factor in different rules if you had a mix of retirement investments, and in an effort to encourage retirement savings, the new system now allows you to save up to 27.5% of your taxable income when making retirement contributions.

How to maximise your tax saving

Many underestimate their financial requirements at retirement age and fail to save enough to live comfortably or are forced to continue working. The new system SARS has implemented has been setup in such a way that the more you save for retirement, the less tax you will pay. This means that potentially your taxable income can be reduced by over a quarter (27.5%), reducing your tax liability and resulting in a smaller tax payment. It is important to note that there is a ceiling of R350 000 that can be allocated to retirement contributions per year.

Let’s look at an example: Imagine you are earning a total taxable income of R40 000 per month (R480 000 per annum). Over the last few years you had setup a recurring payment of R2000 per month (R24 000 per annum) for your retirement fund. This means that under the new system you are only making use of a 5% deduction to your total taxable income when 27.5% is available for use. i.e. R480 000 – R24 000 = R456 000. This positions you in a tax bracket for R456 000.

With the new system, you could utilize the full 27.5% and pay as much as R11 000 per month into your retirement fund. With a monthly payment of R11 000 per month, your annual taxable income would reduce to a much lower R348 000, placing you in a lower tax bracket. This means that a good portion of money that you would be paying on tax would effectively be going into your own retirement savings, making this system a great incentive to save more for your retirement.

If you need to speak to a tax professional, call Dirmeik Consulting on:
Cape Town: 021 421 4444,
Johannesburg: 010 007 3026,
Durban: 031 007 0881

The post Retirement Funds and Tax appeared first on Dirmeik Consulting.

Income Tax Calculators

The tax brackets below are key to calculating your taxable income and are what online tax calculators use to provide you with a final figure. However before you default to using one of these online tools, it is valuable to understand their pitfalls.

While it is critical to pay the taxes you owe, there are many factors that will influence your final taxable income depending on the type of business and even industry you are in. This is one of the reasons it is advisable to consult with a tax professional. For a nominal fee, you can rest assured that you will be paying the correct tax and in the process, you may see a considerable saving. This is the value that a tax calculator simply cannot offer you.

Income tax brackets for the period 1 March 2017 to 28 Feb 2018

Tax Rebates 2017-2018

Tax Thresholds 2017 – 2018

Comparative Tax Rates

Previous Tax Brackets

If you need to review a previous year’s income tax bracket, we have included quick links below for tax tables spanning the last 5 years:

Income Tax Rates 2016/2017

Income Tax Rates 2015/2016

Income Tax Rates 2014/2015

Income Tax Rates 2013/2014

Income Tax Rates 2012/2013

Free Tax Guide 2017/2018

Every year we offer you a free tax guide. This guide contains all the important tax related details for the year including the tax brackets and tables listed above. Download the Free Tax Guide 2017/2018.

Speak to a Tax Consultant

While these tax tables may seem simple enough to understand, they do not take into account all of the other figures in your business that will affect your final taxable income. Reach out to Dirmeik Consulting for expert tax advice.

Call us on:
Johannesburg: 010 007 3026,
Cape Town: 021 421 4444,
Durban: 031 007 0881

The post Income Tax Brackets appeared first on Dirmeik Consulting.

While many of these tougher measures span the full scope of the budget, we will be purely focusing on the some of the highlights that may affect you as an individual. While some areas may be difficult to swallow, there is definitely still a scattering of good news:

Personal Income Tax – New bracket

There is bad news for any high earners. An additional taxation bracket has been added for the wealthy of South Africa. Anyone earning over R1.5 million rand per annum will now be taxed at 45%  (which is up 4% compared to the previous top level of 41%).

Property Market – Transfer Costs

One of the positives of the 2017 budget was the increase in the tax free limit on property purchases. Any property you purchase from the 1st of March 2017 will have the first R900 000 taxed at zero percent. This is up from the previous amount of R750 000 and should be welcomed by anyone in, or looking to enter into the property market.

Fuel levy Increases

By now motorists are likely numbed to the ever increasing fuel price. So it should come as little surprise that the general fuel levy will increase by 30c per litre on April 5th 2017, bringing it to a total of R3.15 per litre of petrol and R3.00 per litre of diesel. On this same date the amount for the road accident fund will increase by 9c per litre of petrol and diesel.

Sin Taxes

Brace yourself for more increases on alcohol and tobacco:
Beer: 12c per 340ml
Ciders and alcoholic fruit beverages: 12c per 340ml
Cigarettes: 106c per packet of 20
Cigarette tobacco: 119c per 50g
Cigars: 658c per 23g
Fortified wine: 26c per 750ml
Pipe tobacco: 40c per 25g
Sparkling wine: 70c per 750ml
Spirits: 443c per 750ml
Unfortified wine: 23c per 750ml

Sugar Tax – Implementing soon

A sugar tax is set to be implemented as soon as the necessary legislation is approved. The taxation rate will be 2.1c per gram of sugar content above 4g per 100ml.

Carbon Tax – Revised Bill

Towards the middle of 2017, a revised Carbon Tax Bill will be published for public consultation and tabling.

Social Grant Increases

There were numerous increases under social grants which are detailed below:
Care dependency grants increased from R1 505 to R1 600
Child support grants shifted from R355 to R380
Foster care grants rose from R890 to R920
Disability grant changed from R1 505 to R 1 600
State old age grant saw an increase from R1 505 to R 1 600 per month
State old age grant for over 75s increased from R1 525 to R1 620
War veterans grant rose from R1 525 to R 1 620

Should you have any questions on how these changes will affect you or your business, be sure to reach out to Dirmeik Consulting on:

Cape Town: 021 421 4444,
Johannesburg: 010 007 3026,
Durban: 031 007 0881

The post Budget 2017 appeared first on Dirmeik Consulting.