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Income Tax Thresholds

Monday, 23 April 2012   (0 Comments)
Posted by: SAIT Technical
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Friday Page by Michael Stein

 In his Budget speech of February 2012, the Minister of Finance announced the proposed revision, once again, of the income tax rates for individuals. The budget handouts also revealed that the amounts of the primary, secondary (over 65) and tertiary (over 75) rebates have been very moderately increased. The primary rebate has been increased from R10 755 to R11 440, the secondary rebate from R6 012 to R6 390 and the tertiary rebate from R2 000 to R2 130. These changes apply to the year of assessment ending on 28 February 2013 and the extent of these increases will hardly lead to euphoria amongst taxpayers.

The top marginal rate of tax for individuals has gone up from R580 000 to R617 000. While this adjustment is laudable, it is still a very low level of taxable income at which to reach the country's top rate of tax. After all, R617 000 a year (or R51 417 a month) is hardly the taxable income of the super rich. I would suggest that the top rate of tax should be reached at a taxable income of well over R1,2million a year – and close to R2million! But obviously with our relatively small number of personal tax payers as a proportion of the total population, this is unaffordable at present.

According to the budget handouts, and as I mentioned in my Friday Page of 2 March 2012, there will be 6 177 050 individual taxpayers in the 2012/13 year, of whom 4 864 000 will in fact derive too low a taxable income to actually pay any normal tax, so that the entire estimated normal tax burden of R285 970 000 will be borne by only 1 313 050 taxpayers.

The effect of the changes to the tax table and the increase in the rebates is to increase the levels of taxable income at which taxpayers will become liable for income tax in the 2013 year of assessment. They are R63 556 for taxpayers aged under 65 years, R99 056 for those aged 65 years or more and R110 889 for those aged 75 years or more.

The basic interest exemption for taxpayers aged under 65 years has unfortunately not been increased. It remains set at R22 800. The basic interest exemption for taxpayers aged over 65 years has also not been increased and remains set at R33 000.

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