BUDGET UPDATE 2016 – WHAT DOES THIS MEAN FOR YOU?
INDIVIDUALS :
Minor tax relief on income tax monthly as per the table below:
|
Taxable Income |
2015/2016 rates |
2016/2017 rates |
Tax change |
% Change |
|
R150 000 |
R13,743 |
R13,500 |
-R243 |
-1.8% |
|
R200 000 |
R24,191 |
R23,460 |
-R731 |
-3.1% |
|
R250 000 |
R37,191 |
R36,460 |
-R731 |
-2.0% |
|
R300 000 |
R50,986 |
R49,780 |
-R1206 |
-2.4% |
|
R400 000 |
R82,326 |
R80,780 |
-R1546 |
-1,9% |
|
R500 000 |
R118,326 |
R116,460 |
-R1866 |
-1.6% |
|
R750 000 |
R215,297 |
R213,431 |
-R1866 |
-0.9% |
|
R1 000 000 |
R317 797 |
R315,931 |
-R1866 |
-0.6% |
Capital Gains tax has increased for indivduals from 13,7% to 16.4% and the annual CGT exclusion has increased from R30,000 to R40,000. The lifetime GCT exclusion on death remains at R300,000.
The interest Exemption has remained at R23,800 for indivuals under 65 and R34,500 for tax payers over 65.
The tax free savings account limits have also remained at R30,000 per annum or R2500 per month.
Medical tax credits have been increased to R286 for a main member or R572 for main member + 1 dependent + R192 for each additional dependent thereafter.
Transfer Duty Rates now as follows :
|
Taxable Income |
Rate of Tax |
|
R0 – R750,000 |
0% of property value |
|
R750,001 – R1,250,000 |
3% of property value above R750,000 |
|
R1,250,001 – R1,750,000 |
R15,000 + 6% of property value above R1,250,000 |
|
R1,750,000 – R2,250,000 |
R45,000 + 8% of property value above R1,750,000 |
|
R2,250,000 – R10,000,000 |
R85,000 + 11% of property value above R2,250,000 |
|
R10,000,001 and above |
R937,500 + 13% of property value above R10,000,000 |
Consolidation of Pension, provident and retirement annuity’s means that taxpayer deductions across all three retirement vehicles will be increased to 27,5% and capped at R350,000 in respect of total contributions made. Taxable income for the purpose of this calculation will include passive income but exclude taxable CGT.
Employers contributions to all retirement funds (ie whether pension / provident / retirement) will be taxed as a fringe beneit in the hands of the employee, however the full retirement contribution is a tax deduction in the hands of the employee (ie the employee and employers contribution) so it is effectively in and out if you and your employer both contribute towards the fund. The employer also enjoyes a tax deduction on their full contribution towards all / any retirement fund.
Example : Pension Fund
|
Fringe Benefit |
||
|
Mary's salary is R500 000 per annum. She contributes 7.5% of her salary |
||
|
(100% pensionable) to a pension fund. Her employer contributes another |
||
|
15% of her salary to the same pension fund. |
||
|
The impact on her net income will be as follows: |
Pre- |
Post - |
|
01-Mar-16 |
01-Mar-16 |
|
|
Salary (assume it is her only income) |
R 500 000 |
R 500 000 |
|
Plus |
N/A |
R 75 000 |
|
Employer contribution included as a fringe benefit |
||
|
TOTAL |
R 500 000 |
R 575 000 |
|
Less |
R 37 500 |
|
|
Employee contributions at 7.5% of pensionable income |
|
|
|
Less |
|
R 112 500 |
|
Employee contribution (incl. employer contribution) |
|
|
|
at 22.5% of taxable income or remuneration |
|
|
|
NET TAXABLE INCOME |
R 462 500 |
R 462 500 |
Example : Provident Fund
|
Fringe Benefit |
||
|
Mary's salary is R500 000 per annum. She contributes 7.5% of her salary |
||
|
to a provident fund. Her employer contributes another 15% of her salary |
||
|
to the same provident fund. |
||
|
The impact on her net income will be as follows: |
Pre- |
Post - |
|
01-Mar-16 |
01-Mar-16 |
|
|
Salary (assume it is her only income) |
R 500 000 |
R 500 000 |
|
Plus |
N/A |
R 75 000 |
|
Employer contribution included as a fringe benefit |
||
|
TOTAL |
R 500 000 |
R 575 000 |
|
Less |
Not Allowed |
|
|
Employee contributions at 7.5% of pensionable income |
N/A |
|
|
Less |
N/A |
R 112 500 |
|
Employee contribution (incl. employer contribution) |
||
|
at 22.5% of taxable income or remuneration |
||
|
NET TAXABLE INCOME |
R 500 000 |
R 462 500 |
Increase in the commutation of retirement annuities from R75,000 to R247,500. This is welcome news an applies per fund, that is if you have a R230,000 retirement annuity with company A and R245,000 retirement annuity with company B you would be able to take both amounts out as a lump sum.
Sin Tax increases :
| company: | Taylored Financial Solutions |
| address: | 3 Silverstone Way Douglas Crowe Drive |
| tel: | 0873543911 |
| fax: | |
| website: | https://www.tayloredfs.co.za |
| FSP Number: | 45135 |