On 24 February 2016, Min. Pravin Gordhan tabled National Treasury’s annual budget. While it contained a few surprises (both for what it said and that which it did not), the focus in studying the budget has always been the new tax rates proposed.
Below we set out the new rates that will apply going forward. The two most significant changes are the increase in the capital gains tax inclusion rate, as well as the introduction of yet another transfer duty scale for properties purchased with a value in excess of R10 million.
It is important to note that although not approved by Parliament as yet, the below rates are unlikely to be changed.
Income tax rates for individuals for the 2016/2017 tax year:
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Taxable income (R)
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Rates of tax (R)
|
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0 – 188 000
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18% of each R1
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188 001 – 293 600
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33 840 26% of the amount above 188 000
|
|
293 601 – 406 400
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61 296 31% of the amount above 293 600
|
|
406 401 – 550 100
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96 264 36% of the amount above 406 400
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550 101 – 701 300
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147 996 39% of the amount above 550 100
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701 301 and above
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206 964 41% of the amount above 701 300
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Interest Exemptions from Income Tax (unchanged):
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2017
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Person younger than 65
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R23 800
|
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Person 65 and older
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R34 500
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Medical credits available to be deducted against an income tax liability:
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Per month 2017 For the taxpayer who paid the medical scheme contributions R286 For the first dependant R286 For each additional dependant(s) R192
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The following rebates will apply for individuals against their tax liability calculated in accordance with the above:
Cumulative Rebates from Income Tax for Individuals:
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Tax Rebate
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|
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Primary
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R13 500
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Secondary (65 and older) (unchanged)
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R7 407
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Tertiary (75 and older) (unchanged)
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R2 466
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Income Tax for companies is still levied at 28%, whilst the rate is retained at 41% for trusts.
Small Business Corporations are not taxed at a flat rate of 28%, but according to the below table for tax years ending between 1 April 2016 and 31 March 2017:
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Taxable income (R)
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Rate of tax (R)
|
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0 – 75 000
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0%
|
|
75 001 – 365 000
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7% of the amount above 73 650
|
|
365 001 – 550 000
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20 395 21% of the amount above 365 000
|
|
550 001 and above
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59 150 28% of the amount above 550 000
|
Capital gains tax is calculated by including 40% (previously 33.3%) of an individual’s net capital gains (less R40,000) in their taxable income to be used for calculating their income tax liability (see table above). The inclusion rate for ordinary trusts and companies are increased to 80% (previously set at 66.6%).
The VAT rate has been retained at 14%. The same applies to donations tax and estate duty, both still levied at 20%.
Transfer duty applicable to individuals:
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Value of the property (R)
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Rate
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0 – 750 000
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0%
|
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750 001 – 1 250 000
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3% of the value above 750 000
|
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1 250 001 – 1 750 000
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15 000 6% of the value above 1 250 000
|
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1 750 001 – 2 250 000
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45 000 8% of the value above 1 750 000
|
|
2 250 001 – 10 000 000
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85 000 11% of the value above 2 250 000
|
|
10 000 001 and above
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R937,500 13% of the value exceeding R10 000 000
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Turnover tax rates:
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Taxable turnover (R)
|
Rate of tax (R)
|
|
0 – 335 000
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0%
|
|
335 001 – 500 000
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1% of the amount above 335 000
|
|
500 001 – 750 000
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1650 2% of the amount above 500 000
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|
750 001 and above
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6 650 3% of the amount above 750 000
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This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)
