How will the budget affect your purse?

0
549
Pravin Gordhan

Unchanged personal income tax rates and R5.5 billion in personal income tax relief are most likely good news for many struggling South Africans.
This is what Karin Muller, Head of Growth Market Solutions at Sanlam, commented on the 2016 National Budget announced by Finance Minister, Pravin Gordhan, last week. South Africa has a progressive tax system where higher income earners pay more tax than lower income earners and therefore promote the redistribution of wealth. Here are some of the highlights of the budget of 2016.
• Maximum taxable income for the lowest tax bracket increased from R181 900 to R188 000 per year.
• Taxable income for the two highest income tax brackets of 39% and 41% remained unchanged at R550 101 – R701 300 and R701 300+ per annum respectively. Someone who earns around R300 000 per year will pay R1 206 less tax over the next year. Someone who earns above R550 100 will save R1 866 in income tax for the year.
• Transfer duties for properties valued above R10 million increase from 11% to 13% of the amount above R10 million. This means that the transfer duties on a R12 million property will cost close to R1,2 million (R1 197 500).
• The first R30 000 of a taxpayer’s annual capital gain was excluded from capital gains tax last year. This amount has now been increased to R40 000. This means 40% of your capital gain will be included in your taxable income and taxed together with your other income.
• Green tax such as tyre levy, tax on incandescent globes, plastic bags and on motor vehicle emissions was surprising tax changes. Minister Gordhan introduced a tyre levy from
1 October 2016.
• The sugar tax which will be introduced from 1 April 2017 is in line with what has been happening in the rest of the world, says Muller.
• The general fuel levy increases by
30 cents a liter, which will put motorists under strain given petrol price increases linked to the weaker rand.
• The increase in sin taxes of between 6.7% and 8.5% come as no surprise.
– A 340ml can of beer will cost 11c more and a packet of 20 cigarettes will cost 82c more.
– Whisky and wine will go up by R3.94 and 18c a bottle respectively.
• Tax-free interest income on investment returns will remain at the same levels of R34 500 for people who are 65 and older and R23 800 for individuals below 65.
• Medical tax credits will be increased from R270 to R286 for the first two beneficiaries and from R181 to R192 for every beneficiary thereafter. This means that, for a family of four, your medical credits will increase from R902 to R956, resulting in a R11 472 reduction in tax per year.