BUDGET SUMMARY 2018/2019
In my view a mild budget this year, with marginal changes to sin tax, medical tax credits, and income tax brackets. The big talking point was around VAT increasing by 1% however this was considered in last years budget but not promulgated so not a big surprise when it was announced.
The top 4 income tax brackets were remained the same for this tax year with below inflation adjustments to the bottom three brackets. Trusts (bar special Trusts) will now be taxed at a whopping 45%. The new brackets are :
|
Taxable Income |
Rate of Tax |
|
0 – R195,850.00 |
18% of taxable income |
|
R195,851.00 - R305,850.00 |
R35,253.00 + 26% of taxable income above R195,851.00 |
|
R305.851.00 – R423,300.00 |
R63,853.00 + 31% of taxable income above R305,850.00 |
|
R423,301.00 – R555,600.00 |
R100,263.00 + 36% of taxable income above R423,301.00 |
|
R555,601.00 – R708,310.00 |
R147,891.00 + 39% of taxable income above R555,600.00 |
|
R708,311.00 – R1,500,000.00 |
R207,448.00 + 41% of taxable income above R708,310.00 |
|
R1,500,001.00 and above |
R532,041.00 + 45% of taxable income above R1,500,000.00 |
Tax payers earning below the following earnings levels will not pay tax as they fall below the tax threshold for this tax year:
Below age 65 an amount of R6,512.50 per month
Between age 65 and 75 an amount of R10,083.33 per month
Over the age of 75 an amount of R11,275.00 per month
Basic household items (eg brown bread, white bread, paraffin) will be zero rated for VAT come 1 April when VAT will increase from 14% to 15%. 85% of Vat revenue is collected from the wealthier 30% of the country.
No change to the current interest exemption of R23,800.00 for under 65’s and R34,500.00 for over 65’s. The tax free savings limit of R33,000.00 per annum has also not changed since last year.
Marginal increases to medical tax credits :
- From R303 to R310 per month per beneficiary for the first beneficiary
- From R204 to R209 per month for each additional beneficiary
Retirement lump sums still only have the first R500,000.00 drawn tax free and on a pre-retirement withdrawal the first R25,000.00 is tax free.
Even more reason to stop smoking and give up the sugar and boozing :
Tax on a packet of 20 cigarettes increases by R1.22 , whilst Tax on a 340ml can of beer increases by 14.66c and on 750ml of wine increases by 27.75c . For the spirit drinkers on a 750ml bottle the increase is R4.80
Estate Duty remains unchanged for those of us with estates less than R30 million at 20%. However for estates bigger than R30million estate duty has been increased to 25%. The exemptions of R3,5million on Estate Duty and R100,000 donations tax per tax year per natural person for donations tax also remains unchanged.