This week the Minister of Finance delivered the annual Budget speech for South Africa’s year ahead. In his speech, the Minister, Tito Mboweni placed emphasis on ridding the government of rot in order for new growth to take place – a clear indication that the ruling party are trying their best to clean up the corruption that has plagued the government over past few years, ahead of the upcoming election.
One of the big announcements of the budget was that the state will be putting R69 billion into Eskom over the next 3 years, however this does come with certain conditions and Mboweni stated that “Pouring money directly into Eskom is like pouring water into a sieve”. A clear acknowledgement that the government are aware of the troubles at Eskom and have a plan to try and turn the entity around.
Minister Mboweni further announced that there’d be no changes to the Income Tax brackets, which could mean that those who get salary increases this year could fall victim to “bracket creep” and in turn move into a higher tax bracket resulting in higher taxes.
Of course, the main points that interested us was to see if there were any changes that relate to the property industry. On that front it was all good news, with no changes to Transfer Duty, Withholding Tax or Capital Gains Tax.
Below is a summary of the main Tax rates:
INCOME TAX: INDIVIDUALS & TAX
Individuals & Special Trusts
| Taxable Income (R) | Rate of Tax (R) |
| 0 – 195 850 | 18% of taxable income |
| 195 851 – 305 850 | 35 253 + 26% of taxable income above 195 850 |
| 305 851 – 423 300 | 63 853 + 31% of taxable income above 305 850 |
| 423 301 – 555 600 | 100 263 + 36% of taxable income above 423 300 |
| 555 601 – 708 310 | 147 891 + 39% of taxable income above 555 600 |
| 708 311 – 1 500 000 | 207 448 + 41% of taxable income above 708 310 |
| 1 500 000 & above | 532 041 + 45% of taxable income above 1 500 000 |
Trusts other than Special Trusts
| Rate of 45% |
INCOME TAX: COMPANIES, SMALL BUSINESS CORPORATIONS & MICRO BUSINESSES
Companies
| Type | Rate of Tax (R) |
| Companies | 28% of taxable income |
Small Business Corporations
| Taxable Income (R) | Rate of Tax (R) |
| 0 – 79 000 | 0% of taxable income |
| 79 001 – 365 000 | 7% of taxable income above 79 000 |
| 365 001 – 550 000 | 20 020 + 21% of taxable income above 365 000 |
| 550 001 and above | 58 870 + 28% of the amount above 550 000 |
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 | 1650 + 2% of taxable turnover above 500 000 |
| 750 001 and above | 6650 + 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% |
| 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 for individuals (at least 55 years of age) of R1.8 million, 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 – 900 000 | 0% |
| 900 001 – 1 250 000 | 3% of the value above 900 000 |
| 1 250 001 – 1 750 000 | 10 500 + 6% of the value above 1 250 000 |
| 1 750 001 – 2 250 000 | 40 500 + 8% of the value above 1 750 000 |
| 2 250 001 – 10 000 000 | 80 500 + 11% of the value above 2 250 000 |
| 10 000 001 and above | 933 000 + 13% of the value exceeding 10 000 000 |
For further information and a more detailed breakdown of the Budget you can visit the SARS website or contact us on info@nonres-sa.com