2024/25 Budget Summary

On 21 February 2024, the National Treasury presented South Africa’s 2024 Budget Speech. Individual taxpayers will be pleased to learn that there will be no major tax proposals implemented this year, nor have any changes been made to personal income tax tables, rebates and thresholds. The highest marginal tax rate for individual taxpayers and special trusts remains at 45%.

Retirement fund lump sum withdrawal benefits

Retirement Fund Lump Sum Benefits or Severance Benefits

• With 2024 being an election year, VAT and income taxes were not hiked, and also not the fuel levy or RAF (Road Accident Fund) levy, yielding tax relief of R4bn.
• The Budget did see the normal rise in sin taxes, with the prices of various types of alcohol to increase by between 6.7% and 7.2%, and the types of different tobacco products seeing hikes of between 4.7% and 8.2%.
• Global minimum tax at 15% applies to large multinational groups of companies from 1st January 2024.
• Two-pot retirement reform to be implemented on 1st September 2024. An estimated R5 billion is likely to be raised in 2024/2025 due to tax collected as fund members access once‐off withdrawals.
• From the date of the implementation of this system, all contributions to provident, pension and retirement annuity funds will be split into two components: One-third of the contributions will be credited to a savings component, which members can access before retirement in the event of an emergency, and the remaining two-thirds will be credited to a retirement component, which will be inaccessible before a member retires, and at retirement must be used to purchase a pension-providing product.
• On the climate change front, producers of electric vehicles in South Africa will be able to claim 150 per cent of qualifying investment spending as an incentive to aid the transition to new energy vehicles.
• No inflationary adjustments have been made to the personal income tax brackets, tax thresholds, tax rebates or medical aid credits. This is expected to raise additional tax revenue of R18.2 billion

 Tax rates from 1 March 2024 to 28 February 2025: Individuals and special trusts

 What is next in the process of the Two-Pot system?

• Once the two bills (the Pension Funds Amendment Bill and the Revenue Laws Amendment Bill) have been signed into law by the President, retirement funds must apply for rule amendments with the Financial Sector Conduct Authority and change their systems to implement the two-pot regime from 1 September 2024. Funds will also communicate with their members on how savings withdrawal claims will be processed.