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.
Interest Exemptions from Income Tax (unchanged):
Medical credits available to be deducted against an income tax liability:
Per month 2017
For the taxpayer who paid the medical scheme contributions R286
For the first dependant R286
For each additional dependant(s) R192
The following rebates will apply for individuals against their tax liability calculated in accordance with the above:
Cumulative Rebates from Income Tax for Individuals:
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:
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:
Turnover tax rates:
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)