A glance over the most salient points raised in South Africa’s Minister of Finance Malusi Gigaba’s 2018/2019 budget speech and it is obvious that we should expect a tough fiscal year ahead.
This year’s budget speech has made headlines because the VAT rate has been increased from 14% to 15%, with personal income tax expected to generate R505.8 billion, VAT R348 billion and company tax R231 billion in the 2018/2019 financial year.
It is important to recognise that some relief will be provided for lower income individuals through an increase in the bottom three personal income tax brackets and the rebates.
From an employer’s point of view, the budget has several implications for payroll administration.
Primarily, tax rates governing individuals and special trusts from 1 March 2018 to 28 February 2019 have been adjusted. For example, those with a taxable income of 0 – 195 850 will pay 18% of taxable income. At the opposite end of the spectrum, those who earn 1,500 0001 and above will pay 532 041 + 45% of taxable income above 1500 000.
There are also various changes to tax rebates and thresholds to consider. To highlight, a primary rebate is positioned at R14 067, while secondary (persons 65 and older) is R7 713, and tertiary (persons 75 and older) is R2 574.
The tax threshold for those below the age of 65 is R78 150, those aged 65 to below 75 is R121 000, and for those aged 75 and over it is R135 300.
CRS Technologies has released a tax pocket guide for 2018-2019 as a quick and easy tax reference to assist clients.
But, as with most legislation that will influence business operations going forward, it is always best to engage with us directly. We have experts on hand to offer advice.