It’s sometimes hard to believe that the Covid19 pandemic has been with us for over a year now, but here we are, and the 2021 Budget Speech is upon us once more.
Like majority of governments around the world, footing the bill to cover the vast amount of expenses that have racked up due to the pandemic is a challenge that no sane person would want to take on, however that is the responsibility of Finance Minister Tito Mboweni – to find the money to fund it all.
In his address today, Mr Mboweni highlighted the need for government to continue to support the economic recovery by extending short-term economic support and will undertake reforms to lower the cost of doing its business and stabilize the public finances.
While the global economic outlook in uncertain, South Africa expects its real GDP to grow by 3.3% this year and by a further 2.2% in 2022.
The government also hopes that a successful rollout of vaccines against Covid19 will help support the economic recovery, with R9 billion set aside for this. They also aim to take steps to promote faster growth by stabilizing the electricity supply and supporting key industries that have high employment potential.
As expected, the government have decided to not raise any additional tax revenue this year to support the economic recovery as the pandemic starts to ease.
Personal income tax brackets and rebates will increase above the inflation rate of 4%.
Excise duties on alcohol and tobacco increase by 8% while the general fuel levy and road accident fund levy will increase by 15c/litre and 11c/litre respectively.
The tax threshold has increased to R216 200, with a few minor changes to the tax brackets.
No changes to income tax for companies, small business corporations and micro businesses.
Good news for the property market was that there were no changes to Transfer Duty and no changes to Capital Gains Tax or Withholding Tax (which applies to Non Residents selling their property in South Africa).
Below is a summary of the main Tax rates for the year ahead:
INCOME TAX: INDIVIDUALS & TAX
Individuals & Special Trusts
|Taxable Income (R)||Rate of Tax (R)|
|0 – 216 200||18% of taxable income|
|216 201 – 337 800||38 916 + 26% of taxable income above 216 200|
|337 801 – 467 500||70 532 + 31% of taxable income above 337 800|
|467 501 – 613 600||110 739 + 36% of taxable income above 467 500|
|613 601 – 782 200||163 335 + 39% of taxable income above 613 600|
|782 201 – 1 656 600||229 089 + 41% of taxable income above 782 200|
|1 656 601 and above||587 593 + 45% of taxable income above 1 656 600|
Trusts other than Special Trusts
|Rate of 45%|
INCOME TAX: COMPANIES, SMALL BUSINESS CORPORATIONS & MICRO BUSINESSES
|Type||Rate of Tax (R)|
|Companies||28% of taxable income|
Small Business Corporations
|Taxable Income (R)||Rate of Tax (R)|
|0 – 87 300||0% of taxable income|
|87 300 – 365 000||7% of taxable income above 87 300|
|365 001 – 550 000||19 439 + 21% of taxable income above 365 000|
|550 001 and above||58 289 + 28% of taxable income above 550 000|
|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%|
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.
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 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.