Gordhan delivers a safe no surprises budget with some relief for taxpayers
01 March 2013
Posted by: Stiaan Klue
Minister Pravin Gordhan delivered a safe, no real surprises budget today
(Wednesday 27 February) with R7 billion personal tax relief, being 2.5 billion
less than in the previous tax year 2012/13.
income tax brackets and rebates have been slightly adjusted to reduce the
effect of inflation on tax payable. The amount an individual can earn before
being required to pay income tax has been increased for the 2013/14 tax year to
R67111 for individuals below the age of 65, R104611 for individuals
between the ages of 65 and 74 and R117111 for individuals over 75 years.
annual tax rebates for individuals have been increased. The primary annual tax rebate
for individuals under the age of 65 to R12 080, for individuals aged between 65
and 75 to R6 750 and those aged 75 and older to R2 250.
lowest tax bracket remains at a tax rate of 18% (annual taxable income up to
R165600) and the highest tax bracket remains taxable at 40% (annual
taxable income of more than R638 600).
from 1 March 2012 the medical aid capping system was replaced with a tax
credit, bringing in equality for all taxpayers under the age of 65 and improved
benefits for lower earners, a move in line with international best practice.
The medical aid tax credit system is also used in the new tax year, commencing
01 March 2013.
tax credits for medical scheme contributions (reduction of tax payable) will be
increased from R230 to R242 for each of the first two beneficiaries on a
medical scheme and from R154 to R162 for each additional beneficiary on the
medical scheme for the 2013/14 tax year.
medical aid tax credit system will likely result in lower earners receiving
greater benefits, which is a good thing,” comments Philip Meyer, technology
director of payroll and HR software specialist Sage Pastel Payroll & HR.
the biggest changes were for individuals whose taxable income is from one
employer and is below R250 000 a year. They are not required to submit income
tax returns, however they will still be liable to pay income tax. Previously,
this annual earnings limit was R120 000. For example, if an individual earns a
gross salary of R20000 per month (no entitlement to commissions or
bonuses), they no longer have to file their tax returns.
means that there will be more pressure on employers to ensure that tax
deductions and calculations on payslips are accurate.
big proposed change in the Budget Speech effective from March 2014 is that an
employer’s contribution to retirement funds on behalf of an employee will be
treated as a taxable fringe benefit in the hands of the employee. Individuals
will from that date be allowed to deduct up to 27.5 per cent of the higher of
taxable income or employment income for contributions to pension, provident and
retirement annuity funds with a maximum annual deduction of R350 000.
above the cap are carried forward to future tax years. Therefore, all company
contributions towards pension, provident and retirement annuity funds will
become a fringe benefit and it will increase the total tax deduction. If the
company contribution is low, it will only have a small impact on the individual.
However, if the company contribution towards
provident and retirement annuity funds is substantial, it will have a bigger
effect on the individual’s net pay and because the taxable earnings are
greater, the individual will have to pay more tax.
taxes go up and will affect a large portion of the RSA population.
From 3 April 2013, the general
fuel levy will rise by 15 cents per litre to R2.13 while the Road Accident Fund
levy will increase by 8 cents per litre to 96 cents per litre of petrol.
Plastic bag levy - The levy on
plastic shopping bags has encouraged consumers to reduce their use. The levy
will rise from 4 cents to 6 cents per bag from 1 April 2013.
Incandescent light bulb levy - To
promote energy efficiency a levy on incandescent light bulbs was introduced in
2009. The levy is to be increased from R3 to R4 per bulb from 1 April 2013.
Motor vehicle carbon dioxide
emissions tax - The tax on motor vehicle carbon dioxide emissions, which is
intended to encourage consumers to buy vehicles with lower carbon emissions,
will increase from 1 April 2013. For passenger cars, the tax will rise from R75
to R90 for every gram of emissions per kilometre above 120 gCO2/km. In the case
of double cabs it will increase from R100 to R125 for every gram of emissions
per kilometre above 175 gCO2/km.
overseas trends, a policy paper on carbon emissions tax is to be published in
2013 with the view of introducing a carbon tax from 2015.
allowances paid to employees who travel for business within South Africa, will
be tax-free provided the amount paid for meals and incidental costs does not
exceed R319 per day. An amount not exceeding R98 per day for incidental costs
only will also be exempt.
SME businesses with the changes outlined in the new Budget, Sage Pastel Payroll
& HR is incorporating all of the Budget changes to tax bracket values,
medical aid benefits, and tax relief rebates.
Payroll and HR software ensures that payrolls are accurate and legally
compliant the moment the new Budget stipulations take effect in the new tax
year. Currently there are 75 tax certificate totals that need to be considered
when producing payslips, therefore manually doing the calculations is a
daunting task and errors can creep in easily,” says Meyer.
out how the Budget Speech affects your pocket, go to www.pastelpayroll.co.za
and enter your current monthly salary and allowances in the free online Sage
Pastel Payroll & HR Salary Tax Calculator.
SARS has recently
changed the reference number for third party agent appointments from ITA88 to
AA88. This change is already available in the latest e@syFile Version 6.2.2.
SARS has also updated the guidelines for agent appointments. Go to www.sars.gov.za
to view the new Agent Appointment Process and Employer Guide.
McDermott +27 11 478-2055 or 082 608-0019