|FEBRUARY 2022 – SOUTH AFRICA
2022/2023 BUDGET SPEECH AND TAX CHANGES
It is important that employers note the following: South Africa 2022/2023 Budget Speech and important changes affecting payroll
The Minister of Finance, Enoch Godongwana, delivered the Budget Speech for the fiscal year 2022/2023 on Wednesday, 23 February 2022.
Highlights of the Budget Speech:
· Government expects to achieve a primary surplus – where revenue exceeds non-interest expenditure – by 2023/2024. In 2024/2025, main budget non-interest expenditure will grow slightly above CPI inflation.
· The consolidated budget deficit is projected to narrow from 6% of GDP in 2022/2023 to 4.2% of GDP in 2024/2025.
· Gross loan debt will stabilise at 75.1% of GDP in 2024/2025.
· Debt-service costs consume an increasing share of GDP and revenue. They are expected to average R333.4 billion a year.
· Total consolidated government spending will amount to R6.62 trillion over the next three years, and the social wage will take up 59.4% of total non-interest spending over this period.
· Additional allocations of R110.8 billion in 2022/2023, R60 billion in 2023/2024 and R56.6 billion in 2024/2025 are made for several priorities that could not be funded through reprioritisation. These include the special COVID-19 social relief of distress grant, the continuation of bursaries for students benefiting from the National Student Financial Aid Scheme, and the presidential employment initiative.
· The bulk of the spending is allocated to learning and culture (R1.3 trillion), social development (R1 trillion) and debt-service costs (R1 trillion) over the MTEF.
· Economic development and community development grow faster than other functions at 8.5% and 7.9%, respectively.
· Tax revenue strengthened significantly in recent months and is expected to reach R1.55 trillion for 2021/2022, well above projections.
· Given the revenue improvement, government proposes R5.2 billion in tax relief to help support the economic recovery, provide some respite from fuel tax increases and boost incentives for youth employment.
· Most of the relief is provided through an adjustment in personal income tax brackets and rebates. In addition, there will be no increase in either the general fuel levy or the Road Accident Fund levy.
· Progress continues to be made in rebuilding the South African Revenue Service.
· Tax brackets adjusted.
· Medical tax credits increased.
· Tax rebates and tax thresholds increased.
· Employment tax incentive. To encourage businesses to employ young people, government proposes an increase of 50% in the value of the employment tax incentive, effective from 1 March 2022. The incentive will increase from a maximum of R1 000 to a maximum of R1 500 per month in the first 12 months, and from R500 to a maximum of R750 in the second 12 months of eligibility.
Trusts other than special trusts: tax rate of 45%
Medical tax credits
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