Lloyd Viljoen Budget Summary

LLOYD VILJOEN

BUDGET SUMMARY AND MAIN TAX PROPOSALS

FEBRUARY 2015

INTRODUCTION

MAIN TAX PROPOSALS

Nominal gross tax revenue for 2013/14 amounted to R900 billion, a 10.6 per cent or R86.2 billion increase from the prior year.

• The 2014 Budget projected 10.5 per cent growth in tax revenues for 2014/15. This has been revised down to 8.8 per cent, reflecting weaker-than-expected economic growth.

• The 2015 tax proposals reflect government’s commitment to stabilise the fiscus, while ensuring that the tax system remains fair, efficient and progressive.

• The main proposals are to raise personal income tax rates for all but the lowest tax bracket by one percentage point.

• Government proposes to increase the general fuel levy by 30.5 c/litre. At the same time, the RAF levy, used to finance third-party motor vehicle personal accident claims, will be increased by 50 c/litre to support the RAF. It is proposed that these increases become effective on 1 April 2015.

• Reforms will improve the turnover regime for small business and support greater energy efficiency.

• Increases in excise duties on alcoholic beverages and tobacco products are proposed, adding 7 cents to the price of a 340ml can of beer and 82 cents to a packet of 20 cigarettes. Whisky goes up by R3.77 a bottle. These increases take effect immediately.

Individual tax tables

2015/16

2014/15

Taxable income (R)

Rates of tax

Taxable income (R)

Rates of tax

0 – 181,900

18% of each R1

0 – 174,550

18% of each R1

181,901 – 284,100

R32,742 + 26% of the amount above R181,900

174,551 – 272,700

R31,419 + 25% of the amount above R174,550

284,101 – 393,200

R59,314 + 31% of the amount above R284,100

272 701 – 377,450

R55,957 + 30% of the amount above R272,700

393,201 – 550,100

R93,135 + 36% of the amount above R393,200

377,451 – 528,000

R87,382 + 35% of the amount above R377,450

550,101 – 701,300

R149,619 + 39% of the amount above R550,100

528,001 – 673,100

R140,074 + 38% of the amount above R528,000

701,301 and above

R208,587 + 41% of the amount above R701,300

673,101 and above

R195,212 + 40% of the amount above R673,100

Rebates

Rebates

Primary

R13,257

Primary

R12,726

Secondary >65

R7,407

Secondary >65

R7,110

Secondary >75

R2,466

Secondary >75

R2,367

Tax threshold

Tax threshold

Below age 65

R73,650

Below age 65

R70,700

Age 65 to 74

R114,800

Age 65 to 74

R110,200

Age 75 and over

R128,500

Age 75 and over

R123,350

MEDICAL TAX CREDITS

Monthly medical scheme contribution tax credits will, from 1 March 2015, be increased from R257 to R270 per month for the first two beneficiaries and from R172 to R181 per month for each additional beneficiary.

TRANSFER DUTIES

Average house prices have recovered slowly over the past two years following a post-2009 decline. The rates and brackets for transfer duties on the sale of property on or after 1 March 2015 will be adjusted to provide relief to middle-income households. The new rates will eliminate transfer duty on all property acquired below R750 000, decrease effective transfer duty liability for properties acquired up to about R2.3 million and increase liability for properties above this amount.

Transfer Duty Rate adjustments

2015/16

2014/15

Property value (R)

Rates of tax

Property value (R)

Rates of tax

0 – 750,000

0% of property value

0 – 600,000

0% of property value

750,001– 1,250,000

3% of property value above R750,000

600,001– 1,000,000

3% of property value above R600,000

1,250,001 – 1,750,000

R15,000 + 6% of property value above R1,250,000

1,000,001 – 1,500,000

R12,000 + 5% of property value above R1,000,000

1,750,001 - 2,250,000

R45,000 + 8% of property value above R1,750,000

1,500,001 +

R37,000 + 8% of property value above R1,500,000

2,250,001+

R85,000 + 11% of the amount above R2,250,000

DIESEL REFUNDS

The diesel refund system allows for a refund of all or part of the fuel levies to producers in the agriculture, forestry, fishing and mining sectors. The administrative system in place since 2000 faces significant technical problems and legal challenges. Some eligible firms are unable to benefit from the system, while others appear to be making disproportionate refund claims. To address these concerns, government proposes to delink diesel refunds from the VAT system from 1 April 2016. The National Treasury and SARS will explore alternative, more equitable rules and administrative procedures after consultation with the affected industries.

WHO PAYS THE TAXES

Taxable Bracket

Registered Individuals

Income Tax Payable

Number

%

R Billion

%

0 - 70,000

8,435,314

54.6%

0

0

70,001 – 150,000

2,725,505

17.6%

12.7

3.2

150,001 – 250,000

1,747,426

11.3%

35.2

8.9

250,001 – 350,000

1,080,762

7.0%

49.1

12.5

350,001 – 500,000

687,085

4.4%

56.9

14.4

500,001 – 750,000

429,454

2.8%

65.3

16.6

750,001 – 1,000,000

164,738

1.1%

41.8

10.6

1,000,001 – 1,500,000

110,686

0.7%

43.4

11.0

1,500,000 +

78,543

0.5%

89.4

22.7

Total

15,459,513

100.0

393.9

100.0

Randpark Building, 20 Dover Street, Randburg ? 011 787 5723 ? info@lloydviljoen.co.za