FEBRUARY 2020 – SOUTH AFRICA
2020/2021 BUDGET SPEECH
It is important that employers note the following:
South Africa 2020/2021 Budget Speech and important changes affecting payroll
The Minister of Finance, Tito Mboweni, delivered the Budget Speech for the fiscal year 2020/2021 on 26 February 2020.
Highlights of the Budget Speech summarised:
- A consolidated budget deficit of R370.5 billion, or 6.8% of GDP in 2020/21, is projected.
- Gross national debt is projected to be R3.56 trillion, or 65.6% of GDP by the end of 2020/21.
- Revenue is projected to be R1.58 trillion, or 29.2% of GDP.
- Government has allocated R230 billion over ten years to the restructuring of the electricity sector and the achievement of a stable electricity supply. The current electricity shortfall will ease as Eskom finishes critical maintenance.
- SAA has been placed under business rescue and will undergo radical restructuring. Government allocated R16.4 billion to settle guaranteed debt and interest. The associated restructuring costs will be reprioritised within the Budget.
- No major tax increases have been proposed.
- There will be some personal income tax relief.
- Excise duties have been increased to keep pace with inflation.
- To adjust for inflation, the fuel levy increases by 25 cents per litre, of which 16 cents is for the general fuel levy and 9 cents for the Road Accident Fund levy.
- The following adjustments to social grants were announced:
- Old age, disability and care dependency grants increase by R80 to R1860 per month.
– The war veterans grant increases by R80 to R1880 per month.
– The foster care grant increases by R40 to R1040 per month.
– The child support grant increases by R20 to R445 per month.
- Government will reduce the public sector wage bill as a share of overall spending. Last year the finance minister announced measures to realise a R27 billion reduction in the state salary bill over three years by incentivising early retirement in the public sector. This year the cuts are going far deeper. National Treasury has proposed a R160.2 billion cut in the wage bill for state employees in national and provincial departments over three years.
- SAA has been placed under business rescue which will lead to a radically restructured airline. Over the medium term, Government has allocated R16.4 billion to settle guaranteed debt and interest.
- National Treasury intends reducing SA’s 28% corporate income tax rate.
Tax rates from 1 March 2020 to 28 February 2021:
Trusts other than special trusts: tax rate of 45%
Tax rebates and tax thresholds:
To view the official Budget Speech, follow the link
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