Herewith a short summary of some of the tax proposals announced by the Minister of Finance, Pravin Gordhan in his budget on 22 February 2017.

As far as income tax is concerned, these proposals are applicable to the 2018 tax year, i.e. year ending 28 February 2018 for natural persons. Amounts shown in brackets refer to the previous year.

Please note that this is just a summary, and is proposals made by the Minister. The final legislation may differ from these proposals.

Personal tax : Individuals (See Addendum A: Begroting 2017 – Annex A)

Lowest tax rate of 18% applicable on taxable income up to R189 880 (R188 000)
Marginal rate at 41% on taxable income above R708 300 and a new tax bracket of 45% on taxable income above R1 500 000 (41% on R701 300)
Rebate under 65 years of age – R13 635 (R13 500)
65 years and older – R21 114 (R20 907)
75 years and older – R23 607 (R23 373)
Interest exemption under 65 years of age – R23 800 (unchanged)
65 years and older – R34 500 (unchanged)
Tax threshold R75 750 (R75 000)
65 years and older – R117 300 (R116 150)
75 years and older – R131 150 (R129 850)
Medical fund contributions qualify for medical tax credits per year of R3 636 (R3 432) per person for the first two members and R2 448 (R2 304) per person for each additional member.
Tax brackets in respect of lump sum benefits on retirement are unchanged (Addendum B: Begroting 2017 – Annex B-D).

Transfer Duty

Amended in respect of properties bought on or after 1 March 2017. ALL natural persons and legal entities:

New – From 1 March 2017
R0 – R900 000 : Nil
R900 001 to R1 250 000 : R3% above R900 000
R1 250 001 to R1 750 000 : R10 500 + 6% above R1 250 000
R1 750 001 to R2 250 000 : R40 500 + 8% above R1 750 000
R2 250 001 to R10 000 000 : R80 500 + 11% above R2 250 000
Above R10 000 001 : R933 000 + 13% above R10 000 000

Previous – Until 28 February 2017
R0 – R750 000 : Nil
R750 001 to R1 250 000 : 3% above R750 000
R1 250 001 to R1 750 000 : R15 000 + 6% above R1 250 000
R1 750 001 to R2 250 000 : R45 000 + 8% above R1 750 000
R2 250 001 to R10 000 000 : R85 000 + 11% above R2 250 000
Above R10 000 001 : R937 500 + 13% above R10 000 000

Donations Tax (unchanged)

Exempt up to R100 000 p.a.
Donations tax payable at 20% by donor

Estate Duty (unchanged)

Basic deduction : R3,5 million
In case of a married couple, the survivor has an exemption of R7 million less so much of the exemption utilised by the first-dying
Tax rate : 20%

Capital Gains Tax (unchanged)

Capital gains tax inclusion rates increase:

Individuals : 40%
Companies and trusts : 80%

Exclusions for individuals increase:

Annual exclusion : R40 000
Exclusion on death : R300 000
Primary residence : R2 000 000
Small business exclusion [assets up to R10 million] : R1 800 000

VAT (unchanged)

Rate unchanged at 14%
Compulsory VAT registration if turnover more than R1 million per year (unchanged)

Trusts

Rate increases to 45% (41%)
Conduit principle remains

Dividend Withholding Tax

Rate increases to 20% (15%)
Effective 22 February 2017

Other announcements

Tax rate for company unchanged at 28%
Turnover tax for micro business unchanged (Annexure C)
Tax rate for small businesses amended slightly (Annexure D)
Increase of duties on alcohol and tobacco products
Qualifying foreign employment income only exempt from tax if subject to tax in the foreign country
Anti-avoidance measures in respect of section 7C are proposed, in order to include loans to companies owned by a trust, with certain exemptions
Tax free savings account annual allowance increases to R33 000 p.a. (R30 000)

This summary was compiled by Pieter Steenkamp, Tax and Estate Specialist.