Trending in Tax — March 6, 2020

Author: Ernest Marais

Service: Andersen Tax

To the relief of many South Africans, the 2020 budget speech has gone against the grain of many speculators who anticipated VAT, corporate and income tax increases. This update covers the proposed changes.

Personal Income Tax Relief

  • The change in the personal income brackets will result in individual taxpayers paying around R2 billion less in income tax. In monetary terms, those earning R460 000 will see a reduction by nearly over R3400 in the next 12 months.

  • Employers will also be pleased to hear the PAYE system shall be reviewed to allow for an automated system that is user friendly, accessible and well maintained.

Fuel levy

  • The fuel levy is set to increase by 25c per litre, to adjust for inflation. The increase comprises of 9c per litre for the RAF levy and 16c per litre for the general fuel levy.

  • Due to the increase, 37% of the petrol price and 39% of the diesel price consist of tax.

Motor Vehicle Emissions Tax

  • Vehicle emission tax shall increase with effect from 1 April 2020 in line with global standards and shift to fuel-efficient cars.

Expat Tax

  • The threshold of the exemption on foreign sourced income of South African Tax residents working abroad has been increased from the proposed R1 million to R1,25 million.

Tax-free Savings

  • The tax-free savings accounts annual contribution limit shall be increased from R33 000 to R36 000 with effect from 1 March 2020.

Transfer Duties

  • No transfer duty shall be payable on the purchase of property with a value below R1 million.

VAT and Capital Gains Tax

  • Despite much speculation it is a big relief that the VAT and capital gains tax rates won’t be raised.

  • Treasury aims to gain additional revenue by broadening the corporate income tax base.

Sin Taxes

  • As expected, most excise duties will increase between 4.4%-7.5% for alcohol and tobacco. In accordance with health policies the state seeks to tax heated tobacco products (such as hookah pipes and electronic cigarettes) from 2021.

Carbon Tax

  • The carbon tax rate will increase by 5.6% for the 2020 calendar year.

Plastic Levy

  • In connection with promoting environmental health the plastic bag levy will be increased from 12 cents to 25 cents at the beginning of April 2020. Incandescent Global Tax Government plans to increase the incandescent light bulb levy to encourage the use of energy efficient light bulbs.

Medical Tax Rebates

  • Government proposes an increase in medical tax rebates in 2020/21 from R310 to R319 per month for the first two beneficiaries and from R209 to R215 for additional beneficiaries.