New Finance Minister, Enoch Godongwana, presented his first Budget Speech today setting out the country’s financial situation and changes for the year ahead.
As the world slowly starts to recover and come back from the Covid 19 pandemic, he noted the need in striking a balance between saving lives and livelihoods, while supporting inclusive growth.
With the world economy expecting to grow by 4.4% this year, South Africa has revised its initial growth estimate down to 4.8% from the previous 5.1%, reflecting the global challenges in recovering from the pandemic and South Africa’s own unique challenges.
Minister Godongwana spoke of the need to reduce the continual demands on the country’s limited public resources from state-owned enterprises and that those enterprises would need to develop and implement sustainable turnaround plans. Eskom remains the main bugbear with its vast amount of debt and its continued inability to provide stable electricity supply for the nation.
Noting that households and businesses are still under financial pressures, “now is not the time to increase taxes and put the recovery at risk!”
As such Personal Income Tax brackets and rebates will be adjusted by 4.5%, in line with inflation, meaning the annual tax-free threshold (for those under 65) will now be R91 250.
A welcome announcement was the reduction in Corporate Income Tax down by 1% to 27% for companies with years of assessment ending on or after 31 March 2023. This is in part due to efforts to create conducive environments for businesses to recover, grow and increase investment to employ more people.
As always, our main interest is seeing if there are any changes to taxes relating to property. This tax year there are no changes at all to Transfer Duty. There will be a slight reduction in the maximum effective tax rate for Capital Gains Tax for companies which will reduce from 22.4% to 21.6%. All other figures remain the same as last year, as does the Withholding Tax rates.
Below sets out in more detail all the relevant changes and tax rates for the forthcoming year:
INCOME TAX: INDIVIDUALS & TAX
Individuals & Special Trusts
|
Taxable Income (R) |
Rate of Tax (R) |
|
0 – 226 000 |
18% of taxable income |
|
226 001 – 353 100 |
40 680 + 26% of taxable income above 226 000 |
|
353 101 – 488 700 |
73 726 + 31% of taxable income above 353 100 |
|
488 701 – 641 400 |
115 762 + 36% of taxable income above 488 700 |
|
641 401 – 817 600 |
170 734 + 39% of taxable income above 641 400 |
|
817 600 – 1 731 600 |
817 600 + 41% of taxable income above 817 600 |
|
1 731 601 and above |
614 192 + 45% of taxable income above 1 731 600 |
Trusts other than Special Trusts
|
Rate of 45% |
INCOME TAX: COMPANIES, SMALL BUSINESS CORPORATIONS & MICRO BUSINESSES
Companies
|
Type |
Rate of Tax (R) |
|
Companies |
27% of taxable income (for years of assessment ending on or after 31 March 2023. |
Small Business Corporations
|
Taxable Income (R) |
Rate of Tax (R) |
|
0 – 91 250 |
0% of taxable income |
|
91 251 – 365 000 |
7% of taxable income above 91 250 |
|
365 001 – 550 000 |
91 250 + 21% of taxable income above 365 000 |
|
550 001 and above |
58 013 + 27% of taxable income above 550 000 for years of assessment ending on or after 31 March 2023. |
Micro Businesses
|
Taxable Turnover (R) |
Rate of Tax (R) |
|
0 – 335 000 |
0% of taxable turnover |
|
335 001 – 500 000 |
1% of taxable turnover above 335 000 |
|
500 001 – 750 000 |
1 650 + 2% of taxable turnover above 500 000 |
|
750 001 and above |
6 650 + 3% of taxable turnover above 750 000 |
CAPITAL GAINS TAX
Capital Gains on the disposal of assets are included in taxable income.
|
|
Maximum Effective Rate of Tax |
|
Individuals & Special Trusts |
18% |
|
Companies |
22.4% (will reduce to 21.6%) |
|
Other Trusts |
36% |
Events that trigger a disposal include a sale, donation, exchange, loss, death or emigration. The following are some of the specific exclusions:
- R2 million gain or loss on the disposal of a primary residence;
- Most personal use assets;
- Retirement benefits;
- Payments in respect of original long-term insurance policies;
- Annual exclusion of R40 000 capital gain or capital loss is granted to Individuals and Special Trusts;
- Small business exclusion of capital gains of R1.8 million for individuals (at least 55 years of age), when a small business with a market value not exceeding R10 million is disposed of, and instead of the annual exclusion, the exclusion granted to individuals is R300 000 for the year of death.
WITHHOLDING TAX
Interest
A final tax at a rate of 15% is imposed on interest from a South African source payable to Non Residents. Interest is exempt if payable by any sphere of the South African Government, a bank, or if the debt is listed on a recognized exchange.
Disposal of Immovable Property
A provisional tax is withheld on behalf of Non Resident sellers of immovable property in South Africa, to be set off against the normal tax liability of the Non Resident.
|
Type |
Rate of Tax |
|
Non Resident Individual |
7.5% |
|
Non Resident Company |
10% |
|
Non Resident Trust |
15% |
TRANSFER DUTY
Transfer Duty is payable at the rates below on all transactions which are not subject to VAT.
|
Value of Property (R) |
Rate |
|
0 – 1 000 000 |
0% |
|
1 000 001 – 1 375 000 |
3% of the value above 1 000 000 |
|
1 375 001 – 1 925 000 |
11 250 + 6% of the value above 1 375 000 |
|
1 925 001 – 2 475 000 |
44 250 + 8% of the value above 1 925 000 |
|
2 475 001 – 11 000 000 |
88 250 + 11% of the value above 2 475 000 |
|
11 000 001 and above |
1 026 000 + 13% of the value above 11 000 000 |
For further information and a more detailed breakdown of the Budget you can visit the SARS website.
For property related queries, please contact us on info@nonres-sa.com