South Africa 2019/2020 Budget Speech and important changes affecting payroll

The Minister of Finance, Tito Mboweni, has delivered the Budget Speech for the fiscal year 2019/2020 on 20 February 2019.

Highlights of the Budget Speech summarized:

  • The consolidated budget deficit is projected to narrow from 4.5% of GDP in 2019/20 to 4% in 2021/22
  • Gross debt is expected to stabilise at 60.2% of GDP in 2023/24
  • The economic and revenue outlook has deteriorated since the October 2018 Medium Term Budget Policy Statement and funding pressures from state-owned companies have increased
  • Baselines have been reduced by R50.3 billion, with about half of this amount relating to compensation. These reductions are offset by provisional allocations of R75.3 billion over the next three years, mainly for Eskom’s reconfiguration
  • The budget proposes tax increases of R15 billion in 2019/20 and R10 billion in 2020/21 relative to the 2018 Medium Term Budget Policy Statement (MTBPS) The additional revenue in 2019/20 will be raised primarily from limiting relief for the effects of inflation on personal income tax
  • From 1 April 2019, zero-rated VAT items will include white bread flour, cake flour and sanitary pads
  • Carbon Tax will be implemented on 1 June 2019
  • Excise duties on alcohol and tobacco products increase by between 7.4% and 9%
  • Fuel levy increases by 29c per litre
  • Visa requirements are being relaxed to make it easier for tourists to visit and invest in South Africa
  • The Government has allocated R567 billion for social grant payments. In 2019, the grant values will increase as follows:
    • R80 increase for old age, disability, war veterans and care dependency grants
    • R40 increase for the foster care grant to R1 000
    • The child support grant will increase to R420 in April and to R430 in October

 For Payroll:

  • No changes will be made to personal income tax brackets, while the tax-free threshold increases from R78 150 to R79 000. By not adjusting the income tax brackets for inflation, the government will raise R12.8 billion.
  • Medical tax credits have not changed
  • Employment Tax Incentive (ETI) eligible income bands increased
    • From 1 March 2019, employers will be able to claim the maximum value of R1 000 per month for employees earning up to R4 500 per month, up from R4 000 previously. The incentive value will taper to zero at the maximum monthly income of R6 500

Tax Rates from 1 March 2019 to 28 February 2020

Individuals and Special Trusts

Tax Rebates and Tax Thresholds

CRS Tax Pocket Guide for 2019-2020 with detailed information to follow,

Contact our legislation team at info@crs.co.za if you require any additional information.

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