SA Taxation - Budget Blues or Opportunity?

Each year the budget speech is a keenly anticipated event. This year the new President of the Republic of South Africa has promised a new dawn, send me and lend a hand.   

All good but how does this affect your finances?   

The budget contained the usual suspects but for the first time in 24 years the burden has been spread more evenly with an increase in the VAT rate from 14% to 15% and an increase in the fuel levy.   

The status quo has in the main be maintained as the following taxes and duties remain unchanged, namely:

1. Personal income tax rates are 18% to a maximum of 45%, with the annual rebate being slightly increased
2. Income Tax rates for Trusts are still 45% from the first rand of net profit. The good news is that the conduit principle remains in tact and allows for great tax planning opportunities.
3. Income Tax Rates for Companies and Close Corporations are 28% and the Small Business Corporation Tax Rate is 0% for amounts under the rebate, increasing to 7%, 21 and 28% depending on the net profit achieved.
4. The dividends tax rate is 20%, save that with smart planning this can be negated.
5. Capital Gains Tax, a discussion point in the run up to the speech was not tinkered with and is zero for gains under R40 000.00 for individuals and zero for small business interests under R 1.8 million if the individual is over 55 years of age and the business interest is less than R 10 million.
6. Gains Tax for Trusts are 36% alternatively if the gains are attributed to beneficiaries this can be zero to a maximum of 18%. 
7. CGT for Companies and Close Corporations is fixed at 22.4%. 
8. It is imperative to note that gains can be set off against capital losses and assessed income losses.   
9. Transfer duties are still zero for properties under R 900 000.00 topping at 13% for properties over the value of R 10 million.

The interesting change was the announcement of an increase in the estate duty rate from 20% to 25% on net deceased estates in excess of R 30 million and an increase in donations tax to 25% if donations in excess of R 30 million are made in any year. This is purportedly due to collect an additional R150 million. This is not much to write home about but we believe it is populist rhetoric.

Another attempt to target the “wealthy” is an increase in the ad valorem taxes for vehicles and luxury goods.

We firmly believe in being a good tax citizen but that does not mean that one must pay more taxes than the Income Tax Act prescribes.   

So, are you a volunteer or a victim when it comes to paying more taxes that you must?   

At iProtect we know the following to be true:   

1. If you are not aware of your rights despite your best efforts to inform yourself you are a victim, but…how much effort have you made?
2. If you are aware and fail to take action you are a volunteer!  Why??

We have numerous solutions to assist you in being as tax efficient as possible by correctly structuring your personal estate (home, personal properties and investments) and your business interests.   

We are all for you doing your bit and more for South Africa and our fellow countrymen but if you feel you want to pay more than you must, then set up a charitable institution (tax free in many cases) instead of having SARS handle the excess payments.   

We look forward to hearing from you to check that you are as tax efficient as possible or if you are not, to assist in solving any inefficiencies that you may face.   

In closing we wish you, health, peace and wealth. 

Courtesy: iProtect and Best Trust Company

Director Jose Delgado –   is a corporate commercial attorney, he read for the BPROC, LLB degrees at the University of the Witwatersrand. After completing his degree he completed his articles of clerkship and was admitted as an Attorney of the High Court. Jose holds various directorships in a variety of differing companies He specialises in Tax Law.

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DURBAN

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JOHANNESBURG

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PO Box 4700, Randburg 2125

Tel No: 011 326 4139

Email: [email protected] 

DISCLAIMER: This newsletter is a general information sheet and should not be used or relied on as legal or other 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 legal adviser for specific and detailed advice. (E&OE)