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Tax revenue pegged higher but some relief for taxpayers

27 March 2014   (0 Comments)
Posted by: Author: Amanda Visser
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Author: Amanda Visser (BDlive)

South Africa’s tax revenue has been revised upwards by R1bn to R899bn for the current tax year, despite earlier predictions that the budgeted tax revenue target would not be met because of the subdued economic climate.

The revenue growth was supported by a healthy performance — compared with the 2012-13 budget — of customs duties, up 14%, value-added tax (12.6%), the fuel levy (10.4%) and personal income tax (10.2%). Corporate income tax grew moderately at 5%.

Finance Minister Pravin Gordhan said in his 2014 budget speech in Parliament on Wednesday corporate income tax revenues would for the first time exceed the 2008-09 peak of R169bn.

He said the marginal revision of the tax revenue for the current tax year compared with the 2013 budget resulted from growth in corporate income tax, which was revised upwards by R7.1bn from R169.8bn to R176.9bn, and custom duties, revised up by R3.2bn from R42.3bn to R44.5bn.

Personal income tax has been revised upwards by R2.7bn to R308.9bn. The positive performance has been offset by downward revisions of dividend tax revenue for the 2013-14 budget by R5.9bn, and VAT by R3.7bn to R239.2bn (2012-13: R215bn).

Mr Gordhan said tax revenue as a percentage of gross domestic product (GDP) was expected to increase from 25.9% in 2013-14 to 26.2% in 2014-14. It would remain below the 27.6% peak of 2007-08 until 2016.

The tax revenue target for the 2014-14 tax year is R993.6bn, and the consolidated budget revenue for the same period is R1-trillion.

Mr Gordhan granted tax relief of R9.3bn to households to compensate for the effects of inflation, which has pushed some individuals into higher tax brackets and reduced their purchasing power.

He said about 69% of taxpayers have a taxable income below R250,000 a year. They are contributing 17% of the personal income tax collected by the South African Revenue Service. This group of taxpayers will get the bulk of the relief — almost 40% — in adjustments made to income-tax brackets and rebates.

About 1,500 individual taxpayers — or 2.4% of the 6.4-million registered individual taxpayers — pay 30.7% of the personal income tax. They have taxable income greater than R1m and will get 7.4% of the relief.

The minister has also announced a slight increase in the monthly medical scheme contribution tax credit from R242 a month to R257 a month for the first two beneficiaries, and from R162 a month to R172 a month for each additional beneficiary. This will be effective from March 1 this year.

The primary rebate for individuals will increase from R12,080 in the current tax year to R12,726 in 2014-15. The secondary rebate will increase from R6,750 to R7,110 and the tertiary rebate from R2,250 to R2,367.

Mr Gordhan also announced changes to company-car fringe benefits that would lessen the burden for taxpayers who are taxed on the use of the car but incur costs out of their own pockets for maintenance, insurance and licensing.

A Treasury spokesman said it was envisaged that these expenses would be deductible against the fringe benefit paid for the use of the car.

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Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.


The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

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