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PERSONAL TAX: Income-tax relief for most South Africans

23 February 2012   (0 Comments)
Posted by: SAIT Technical
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PERSONAL TAX: Income-tax relief for most South Africans
ROY DOWNING


Finance Minister Pravin Gordhan on Thursday proposed personal income-tax relief of R9,5bn in his 2012-13 budget, an increase of R3bn from 2011.Speaking at Parliament, Mr Gordhan said tax revenue recovered last year following a decline a year earlier.

"Although tax revenue is slightly lower than our estimate in February last year, the revised estimate for 2011-12 of R739bn is R10bn higher than projected in last year’s medium-term budget policy statement,” he said.

Taxpayers with an annual taxable income of up to R160000 will receive 14,1% of the proposed tax relief, those with income of between R160001 and R260000 will receive 39,9%, those with income of R260001 to R600000 will receive 31,8%, those with income of R600001 to R1m will receive 7,7%, and those earning more than R1m will receive 6,5%.

Under the new tax proposals, the income-tax threshold for people under 65 will be raised to R63556 from R59750, while over-65s will need to earn R99056 before paying any tax, compared with R93150 at present.

Over-75s will be able to earn R110889 before being taxed, compared with R104261 previously.

Mr Gordhan said the role of tax practitioners and other intermediaries would come under scrutiny this year."Analysis of compliance among the country’s 34000 tax advisers shows practitioners owe more than R260m in outstanding taxes and have more than 18000 income-tax returns outstanding in their personal capacity. If that is their attitude to their own tax compliance, one shudders to think what advice they are giving to their clients,” the minister said.

Turning to medical schemes, Mr Gordhan said a tax credit system would be introduced to contribute to medical schemes from March 1 this year.He said the rate of contribution would be R230 a month for the first two beneficiaries and R154 each for additional beneficiaries."Taxpayers (aged) 65 years and older and people with disabilities will be included in the second phase of this reform, which will be implemented in 2014,” Mr Gordhan said.He said these reforms would significantly improve the fairness of the personal income-tax system.


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