If South African businesses were in the dark about what lies ahead financially, Finance Minister Tito Mboweni made things very clear in his 2019/2020 Budget Speech and important changes affecting payroll.
This budget will affect the pockets of employees and employers, and businesses need to pay close attention to several aspects that will impact on Payroll – that is if they want to cut costs, remain agile and continue to be competitive.
Of course as your trusted HCM, HR and Payroll partner, we’ve highlighted these points, those that will impact either directly or indirectly on corporate fiscal management going forward.
- The budget proposes tax increases of R15 billion in 2019/20 and R10 billion in 2020/21 relative to the 2018 MTBPS estimates. The additional revenue in 2019/20 will be raised primarily from limiting relief for the effects of inflation on personal income tax
- Carbon Tax will be implemented on 1 June 2019
- Fuel levy increases by 29c per litre
- 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.
It is important to note that there are no changes to personal income tax brackets, while the tax-free threshold increases from R78 150 to R79 000. This is a way for the government to generate revenue – by not adjusting the income tax brackets for inflation the government will raise R12.8 billion.
Medical tax credits have not changed.
The ETI will be increased from 1 March 2019. From this date employers may now claim R1 000 for employees earning R4 500 monthly and the incentive will reduce to zero when an employee earns a monthly income of R6 500.
South African citizens who spend more than 183 days in employment outside South Africa will have to pay income tax on foreign employment income that exceeds R1-million.
As always CRS has the expertise and resources to guide all our clients.