FEBRUARY 2021 – SOUTH AFRICA
2021/2022 BUDGET SPEECH
It is important that employers note the following:South Africa 2021/2022 Budget Speech and important changes affecting payroll
The Minister of Finance, Tito Mboweni, delivered the Budget Speech for the fiscal year 2021/2022 on Wednesday, 24 February 2021.
Highlights of the Budget Speech summarised:
· Budget deficit has been revised to 14% of GDP in 2020/2021.
· Gross debt has increased from 65.6% to 80.3% of GDP.
· The 2021 Budget proposes measures to narrow the main budget primary deficit from 7.5% of GDP to 0.8% in 2023/2024.
· The proposed fiscal framework will stabilise debt at 88.9% of GDP in 2025/2026.
· Over the medium term, debt service costs are expected to average 20.9% of gross tax revenue.
· The global and domestic recovery remains highly uncertain, while spending pressures from state-owned companies continue to exert upward pressure on the expenditure ceiling. During 2021 a new round of public-service wage negotiations will take place.
· Government will roll out a free mass COVID-19 vaccination campaign, for which R9 billion has been allocated.
Tax Proposals:
· Government will not raise any additional tax revenue in this budget.
· Personal income tax brackets and rebates will increase above the inflation rate of 4%.
· The UIF contribution ceiling will be set at R17 711.58 per month with effect from 1 March 2021.
· The general fuel levy will increase by 15 cents per litre and the Road Accident Fund levy will increase by 11 cents with effect from 7 April 2021.
· An 8% increase will be levied on excise duties for alcohol and tobacco products.
Social grants:
· Old age, disability and care dependency grants increase by R30 to R1 890 per month.
· The war veterans grant increases by R30 to R1 910 per month.
· The foster care grant increases by R10 to R1 050 per month.
· The child support grant increases by R15 to R460 per month.
For Payroll:
· Tax brackets adjusted
· Medical tax credits increased.
· Tax rebates and tax thresholds increased.
The UIF contribution ceiling to be set at R17 711.58 per month with effect from 1 March 2021.
Trusts other than special trusts: tax rate of 45%
Medical Tax Credits:
Contact our legislation team at info@crs.co.za if you require any additional information.
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