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Below we unpack the tax implications from the 2023 Budget Speech. Contact your advisor for assistance on your personal investments.

1. INDIVIDUALS

Maximum and minimum income tax rates remain unchanged although thresholds for both have increased only slightly. and minimum and maximum earning thresholds remain largely unchanged. The tax- free portion of earnings as well as local dividends tax also remain unchanged, as do foreign dividends.

Provisional taxpayers are not taxed on income under R237,100 and none is levied on income from interest, foreign dividends or rental under R30,000.

Domestic solar PV panels tax rebate

With effect from 1 March, a tax rebate for the purchase and installation of new panels at a private residence of 25% up to a maximum of R15,000 but excluding the cost of batteries and invertors, came into effect.

2. COMPANIES, CLOSE CORPORATIONS & TRUSTS

The tax rates relating to companies, closed corporations and trusts remain unchanged.

4. INDIVIDUAL TAX THRESHOLDS

Tax liability thresholds for all age groups have been reduced. Taxable income and rates of tax on individual and special trusts are on a sliding scale from 18% up to R237,100 to 45% on R1,817,00 and above. Tax rebate thresholds have been increased slightly.

5. ESTATE DUTY AND DONATIONS TAX

Estate duty and donations tax rate remains at 20% for dutiable estate amounts under R30 million but increases to 25% for estate amounts over R30 million.

There same rates apply to Donations Tax although the first R100,000 donated in each tax year remains exempt from donations tax. In addition, donations between spouses are fully exempt.

6. CAPITAL GAINS TAX (CGT)

All rates and thresholds remain unchanged.

7. TRANSFER DUTY

The rates have been revised from zero duty for a property under R1,100 000 to a maximum of 13% over R12,1 million on a sliding scale.

8. RETIREMENT FUNDS

Retirement Fund lump sum withdrawal benefits range from 0% up to R27,500 to 36% of taxable income over R1,089,001 on a sliding scale. Tax rates on Retirement Fund lump sum retirement benefits or severance benefits range from 0% under R550,000 to 36% over R1,155,001.

Tax Harmonisation of Retirement Fund Contributions

As from 1 March 2016, all retirement funds (pension, provident and retirement annuity funds) are treated similarly for tax contribution purposes.

The tax deduction formula of 27,5% per annum (with a cap of R350,000) of the greater of taxable income and remuneration applies to members of all retirement funds, including provident funds.

Annuitisation

Pension and Retirement Annuity (RA) Funds require a compulsory annuity purchase upon retirement with two-thirds of the Fund benefits value, while Provident Fund benefits value as at 1 March 2021 may be commuted in full. The threshold below which a full fund benefit from a Pension, Provident or RA is allowed to be commuted is R247,500.

9. MEDICAL EXPENSES

Medical aid schemes are tax deductible with differing rates nd thresholds and may differ depending on the age of the main member and if any member or dependant is over 65 or disabled.

10. VAT

The15% rate and R1million turnover threshold remain unchanged.

11. FOREIGN EXCHANGE

Allowances remain unchanged.

12. VOLUNTARY DISCLOSURE PROGRAM

Taxpayers who have undisclosed income, whether local or foreign, may avail themselves of the permanent normal SARS Voluntary Disclosure Program (VDP) contained in the Tax Administration Act to mitigate penalties.

As regards unauthorised foreign assets, a person may approach the SA Reserve Bank (SARB) for post-SVDP regularisation, and each case is considered on its own merits.

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