A very mild budget ahead of the elections – no changes to VAT, no changes to the Income Tax tables, no changes to interest rate exemptions, no changes to estate duty, no changes to medical aid tax credits.  Tax collections from this years budget are from indirect sources like the fuel levy, increases in excise duties on alcohol and tobacco and a carbon tax being implemented 1 June 2019.  Sugar tax increase and a plan to tax electronic cigarettes and tobacco heating products also tabled. 

The zero increase on the income tax tables also generates extra tax revenue to the tune of R12.8 billion by a phenomenon called Bracket Creep in which the effect of inflation is not taken into account and so households will feel the impact of inflation, their higher earnings could push them into a higher income tax bracket but the effect of this taxation it is not immediately evident.

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 R6,583.33 per month (up R70,83 per month from 2018 tax year)

Between age 65 and 75 an amount of R10,191.66 (up R108.33 per month from 2018 tax year)

Over the age of 75 an amount of R11,275.00 per month (up R120.83 per month from 2018 tax year).

Basic household items eg white bread, cake flour, sanitary pads will be zero rated for VAT come 1 April 2019..

Interest exemption of R23,800.00 for under 65’s and R34,500.00 for over 65’s remains the same.  The tax free savings limit of R33,000.00 per annum has also not changed since last year.

Marginal increases to medical tax credits :

• Stays R310 per month per beneficiary for the first beneficiary
• Stays 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 R1.14 , whilst Tax on a 340ml can of beer increases by 12c and sugar tax up to 2.21c per gram of sugar.

Estate Duty remains unchanged for those of us with estates less than R30 million at 20% and estates bigger than R30million 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.

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