Geshy Singh
Our government has been funding large shortfalls in the budget since 2009 largely by borrowing since 2009. Since then the huge deficit in the budget was further hindered by economic cycles, which further lead to decreasing growth in the economy.
I will briefly recap the highlights of Praveen Gordhan’s speech last Thursday. There is a fuel levy rise of 30 percent and increase for tobacco and alcohol from six percent to 10 percent.
Primary, secondary and tertiary tax rebates have thankfully but slightly increased as follows; R75 750 for taxpayers younger than 65, R117 300 for taxpayers aged 65 to below 75 and R131 150 for taxpayers aged 75 and older. Tax thresholds have also slightly increased.
Income tax for companies has remained unchanged at 28 percent however, for Trusts other than special trust the rate has increased to 45 percent. Higher income earners have been knocked hard with the increase of R533 625 + 45 percent of taxable income above R1500 000.
There is an increase in the dividend withholding tax rate from 15 percent to 20 percent, which could affect investors who depend on income from dividends. Capital Gains Tax for individuals and special and other Trusts have increased however, CGT for companies have remained unchanged.
Interest exemptions remain unchanged and medical tax credits have increased. The tax rate remains unchanged for retirement bands for withdrawals before retirement age and at retirement. Tax free saving accounts have increased from R30 000 to R33 000.
The threshold for transfer duties for properties has increase from R750 000 to R900 000 for zero percent rate and the amount above the threshold will be as per the tax table implemented as of March 1, 2017, along with the above mentioned rates and many more which has already been released by the South African Revenue Services.
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