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 :

• 82c on a pack of 20 cigarettes
• 11c on a can of beer
• 18c on a bottle of wine (doesn’t mention anything about a box of wine though J)
• R3,94 on a 750ml bottle of spirits
• Fuel levy proposal 30cp/l from 6 April 2016
• R2,30 p/kg tyre levy from 1 October 2016 (on new and pneumatic tyres)
• Possible sugar tax to be introduced next year

 

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