BUDGET & TAX UPDATE 2018 2018 BUDGET & HIGHLIGHTS Where is - PowerPoint PPT Presentation

BUDGET & TAX UPDATE 2018

2018 BUDGET & HIGHLIGHTS

Where is most of our tax collected? YEAR TAX TYPE PIT CIT VAT FUEL CUSTOMS EXCISE DUTY OTHER LEVY DUTY 36,4% 18,1% 26,3% 5,2% 4,3% 3,3% 6.4% 2015/16 37,2% 18,1% 25,3% 2016/17 5,5% 4,0% 3,1% 6,7% 17,3% 38.1% 24,7% 5,6% 4,3% 3.3% 6,7% 2017/18 17,2% 2018/19 37.6% 25.9% 5.8% 4,0% 3,2% 6,4% 3

Impact of tax proposals on 2018/19 revenue Gross tax revenue (before tax proposals) 1 285 146 Budget 2018/19 proposals 36,000 Direct taxes 7,310 Personal income tax 7,510 Revenue from not fully adjusting for inflation 6,810 Revenue if no adjustment is made 14,155 Bracket creep adjustment -7,345 Medical tax credit adjustment 700 Corporate income tax (Special Economic Zones) -350 Estate duty increase 150 Indirect Taxes 28,690 22,900 Increase in value-added tax Increase in general fuel levy 1,220 Increase in excise duties on tobacco products 420 Increase in excise duties on alcoholic beverages 910 Increase in ad valorem excise duties 1,030 Increase in environmental taxes 280 Introduction of health promotion levy 1,930 1,321,146 4 Gross tax revenue (after tax proposals)

2018 Budget Highlights • R36 billion proposal. • VAT is levied at the standard rate of 15% on the supply of goods and services by registered vendors. The tax rate was 14% until 31 March 2018 • Effective Personal income tax increases by not providing full relief for inflation. • 52c/l increase in fuel levies: – comprising 22c/l for general fuel levy & 30c/l in Road Accident Fund levy. • From 1 April, the duty will be levied on the dutiable value of an estate at a rate of 20% on the first R30 million and at a rate of 25% above R30 million. • Donations tax rate increases from 20% to 25% on donations of more than R30 million. • Alcohol & tobacco excise duties to increase between 6 & 10% - potentially raising R4.3 billion additional revenue • Increase in ad valorem customs duties on ‘luxury’ items consumed by wealthier individuals – for example, cars and ‘smart phones 5

TAX UPDATES & CHANGES 6

Tax Tables – Individuals 2018/19 2017/18 Taxable Income (R) Rate of Tax (R) Taxable Income (R) Rate of Tax (R) 0 – 189 880 18% 0 - 195 850 18% 189 881 – 296 540 34 178 + 26% 195 851 - 305 850 35 253 + 26% 296 541 – 410 460 61 910 + 31% 305 851 - 423 300 63 853 + 31% 410 461 – 555 600 97 225 + 36% 423 301 - 555 600 100 263 + 36% 555 601 – 708 310 149 475 + 39% 555 601 - 708 310 147 891 + 39% 708 311 – 1 500 000 209 032 + 41% 708 311 - 1 500 000 207 448 + 41% 1 500 000 and above 533 625 + 45% 1 500 001 and above 532 041 + 45% 7

Rebates 2019 2018 (R) (R) Rebates for natural persons 14 067 13 635 Under 65 – Primary 7 713 7 479 65 and over – Secondary 2 574 2 493 75 and over - Tertiary 8

Tax Thresholds 2019 2018 (R) (R) 78 150 75 750 Under 65 121 000 117 300 65 to 74 135 300 131 150 75 and over 9

Monthly Medical Scheme Contribution Tax Credits 2019 2018 (R) (R) ​310 303 Taxpayer+ 620 606 First dependant 209 204 Each additional dependant 10

Local Interest Exemption & Tax Free Investment 2019 2018 (R) (R) 23 800 23 800 Under 65 34 500 34 500 Over 65 Tax Free Investments • The annual limit on contributions remained at R33 000. The lifetime limit remains at R500 000 11

Capital Gains Tax Exclusions 2019 2018 (R) (R) Annual exclusion 40 000 40 000 Annual exclusion in year of death – gains and 300 000 300 000 losses 2 million 2 million Primary residence exclusion Disposal of small business by natural person if 1.8 million 1.8 million over age 55 or due to ill-health or death Max market value of assets to qualify as a small 10 million 10 million business 12

Capital Gains Tax Effective Rates – YOA commencing 1 Mar 2018 Taxpayer Inclusion Statutory Effective Rate (%) Rate (%) Rate (%) Individuals 40 0 – 45 0 – 18 Trusts Special 40 18 – 45 7.2 – 18 Other 80 45 36 Companies Ordinary 80 28 22.4 Small business corporation 80 0 – 28 0 – 22.4 Employment company (personal service provider) 80 28 22.4 Foreign company (Permanent establishment) 80 28 22.4 Micro-business subject to turnover tax 0 0 0 13

Travelling Allowance • Deemed expenditure table with effect from 1 March 2018 – See revised table in the Tax Guide – Taxpayers are required to record business travel in log book 14

Retirement fund lump sum withdrawal benefits 2018/2019 2017/2018 Taxable Income (R) Rate of Tax (R) Taxable Income (R) Rate of Tax (R) 0 – 25 000 0 – 25 000 0% 0% 25 001 – 660 000 25 001 – 660 000 18% 18% 660 001 – 990 000 660 001 – 990 000 114 300 + 27% 114 300 + 27% 990 001 and above 203 400 + 36% 990 001 and above 203 400 + 36% 15

Retirement fund lump sum benefits or severance benefits 2018/2019 2017/2018 Taxable Income (R) Rate of Tax (R) Taxable Income (R) Rate of Tax (R) 0 – 500 000 0 – 500 000 0% 0% 500 001 – 700 000 500 001 – 700 000 18% 18% 700 001 – 1 050 000 700 001 – 1 050 000 36 000 + 27% 36 000 + 27% 1 050 001 and above 130 500 + 36% 1 050 001 and above 130 500 + 36% 16

Standard company tax remains unchanged at 28% 2018/19 2017/18 Non-mining companies 28% 28% Close corporations 28% 28% Employment companies 28% 28% Non-resident companies (SA sourced income) 28% 28% 17

Withholding Tax • 20% is withheld by the entities paying the dividends to the individuals – No changes announced in 2018 • Disposal of immovable property by non-residents – 7.5% individual, 10% company, 15% trust – No changes from previous Tax Year • Interest paid to non-residents at 15% (imposed on interest from a South African source payable to non-residents) - No changes from previous Tax Year – Exempt if paid by any sphere of SA government, a bank or debt is listed • Royalties (s49B) – 15% from 1 January 2015 • Foreign entertainers and sportspersons • – 15% • Service fees – No withholding tax but qualifying fees may fall into the provisions of reportable arrangements 18

Foreign Dividends • Most foreign dividends received by individuals from foreign companies (shareholding of less than 10% in the foreign company) are taxable at a maximum effective rate of 20% via the normal tax system (not dividends tax). • No deductions are allowed for expenditure incurred to produce foreign dividends. 19

Small Business Corporations – YOA ending between 1 Apr and 31 Mar 2018/2019 2017/2018 Taxable income (R) Rate of Tax (R) Taxable income (R) Rate of Tax (R) 0 – 78 150 0 – 75 750 0% 0% 78 151 – 365 000 75 751 – 365 000 7% 7% 365 001 – 550 000 365 001 – 550 000 20 080 + 21% 20 248 + 21% 550 001 and above 58 930 + 28% 550 001 and above 59 098 + 28% This year, government will respond to the Davis Tax Commission’s report on tax administration and introduce draft legislation to give effect to some of its recommendations 20

Micro Businesses – YOA ending between 1 Mar and 28/29 Feb 2018/2019 2017/2018 Taxable turnover Taxable turnover (R) Rate of Tax (R) (R) Rate of Tax (R) 0 – 335 000 0 – 335 000 0% 0% 335 001 – 500 000 335 001 – 500 000 1% 1% 500 001 – 750 000 500 001 – 750 000 1 650 + 2% 1 650 + 2% 750 001 and above 6 650 + 3% 750 001 and above 6 650 + 3% 21

Subsistence Allowances & Fringe Benefits • Travel in the Republic – meals and incidental costs: R416 (was R397) per day – Incidental costs only: R128 (was R122) per day • Travel outside the Republic – Details of these amounts are published on the SARS website under Legal Counsel / Secondary Legislation / Income Tax Notices / 2018. 22

Transfer duty – Natural and juristic persons Agreements on or after 1 March 2018 Agreements on or after 1 March 2017 Taxable income (R) Rate of Tax (R) Taxable income (R) Rate of Tax (R) 0 – 900 000 0 – 900 000 0% 0% 900 001 – 1 250 000 900 001 – 1 250 000 3% 3% 1 250 001 – 1 750 000 1 250 001 – 1 750 000 10 500 + 6% 10 500 + 6% 1 750 001 – 2 250 000 1 750 001 – 2 250 000 40 500 + 8% 40 500 + 8% 2 250 001 – 10 000 000 2 250 001 – 10 000 000 80 500 + 11% 80 500 + 11% 10 000 001 and above 933 000 + 13% 10 000 001 and above 933 000 + 13% 23

Increases in Fuel Levies effective on 4 April 2018 The general fuel levy will increase by 22 cents per litre and the Road Accident Fund Levy will increase by 30 cents. This will push up: • The general fuel levy to R3.37 per litre of petrol and to R3.22 per litre of diesel • The road accident fund levy to R1.93 per litre for both petrol and diesel. 24

Sin Taxes • Excise duties increases on 22 February 2018: – Cigarettes from R14.30 per pack of 20 cigarettes to R15.52 (8.5%) – Tobacco R16.07 per 50 grams to R17.44 (8.5%) – Cigars from R75.86 to R82.31 per 23g (8.5%) – Traditional African beer no increase – Wine from R3.61 to R3.91 a litre (8.8%) – Spirits from R56.50 to R61.30 on a 750ml bottle (8.5%) – Beer, cider, alcoholic fruit beverage from 146.9c to 161.5c a can (10%) 25

Tax on Sugar-Sweetened Beverages • Health promotion levy, which taxes sugary beverages, will be implemented from 1 April 2018. • SA has the worst obesity rate in sub-Saharan Africa • Denmark, Finland, France, Hungary, Ireland, Mexica and Norway have introduced a tax on sugar-sweetened beverages 26