The 2017/2018 Budget Speech was announced by Finance Minister Pravin Gordhan on 22 February 2017. CentsAccountability knows how the Budget Speech affects your bottom line, so we have provided you with Budget Speech updates, insights, changes and tools – keeping you in the know.
The increase in the maximum marginal rate for individuals to 45% was widely forecast, with trusts being taxable at the same flat rate, the increase in the rate of dividends tax from 15% to 20% (and concomitantly, the same increase in the effective tax rate of foreign dividends). This increase is clearly aimed only at domestic shareholders because most non-resident shareholders will be protected by double tax agreements, and, tellingly, the withholding tax rates on interest and royalties remained unchanged at 15%. The new top bracket, starting at R1.5 million will, so the Minister of Finance contends, only affect approximately 100,000 taxpayers, but these taxpayers will now be responsible for 26.3% of the total tax collected from the personal income tax system. A consequence of the increase in the maximum marginal rate is that it increases the maximum effective rate of capital gains tax (CGT) for individuals from 16.4% to 18%, and for trusts from 32.8% to 36%. We must be thankful for small mercies that the CGT inclusion rate itself was not also increased. Also of note is an absence of any changes to the estate duty regime or the taxation of local trusts, both as recommended by The Davis Tax Committee, which was another set of “reforms” widely expected to be announced.
Budget in a Nutshell for 2017/18:
- Gross domestic product growth will gradually improve from 0.5% in 2016 to 1.3% in 2017 and 2.0% in 2018, supported by improved global conditions and rising consumer and business confidence. The percentages are considerably lower than last year’s estimates. The review says though that greater availability and reliability of electricity should also support stronger growth in 2018/19.
- Exports are expected to grow by 1.9% in 2017, 4.9% in 2018 and 5% in 2019, after estimated negative growth of -1.2% last year.
- After reaching 6.4% in 2016, consumer inflation is expected to decline to 5.7% in 2018.
- The current account deficit, after reaching 4% in 2016, will come down to 3.7% in 2018 and 3.8% in 2019.
- Government will continue to enable investment through regulatory reforms and partnerships with independent power producers.
- Public sector infrastructure bottlenecks will be addressed through reform and capacity building. During 2017/18, government will establish a new financing facility for large infrastructure projects.
- The budget deficit (consolidated) crept up to 3.4% for 2016/17 from the 3.2% stated in last February’s budget. This was due to less revenue collected than expected. The deficit is expected to narrow to 3.1% for 2017/18 and 2.6% in 2019/20.
- State debt is also steadily creeping up. Debt stock as a percentage of GDP is expected to stabilise at 48.2% in 2020/21 (previously 46.2% in 2017/18, and before that 43.7% in 2017/18).
- The main budget non-interest expenditure ceiling has been lowered by R26bn over the next two years (almost the same as the R25bn planned last year).
- An additional R28bn (R18.1bn last year) of tax revenue will be raised in 2017/18. Measures to increase revenue by a proposed R15bn in 2017/18 will be outlined in the 2018 Budget.
- R30bn has been reprioritised through the budget process to ensure core social expenditure is protected.
- Real growth in non-interest spending will average 1.9% over the next three years. Apart from debt-service costs, post-school education is the fastest-growing category, followed by health and social protection.
INCOME TAX: INDIVIDUALS AND TRUSTS
Tax rates for the period from 1 March 2017 to 28 February 2018
Taxable Income Rates of Tax
0 – 189 880 18 % of taxable income
189 881 – 296 540 34 178 + 26% of taxable income above 189 880
296 541 – 410 460 61 910 + 31% of taxable income above 296 540
410 461 – 555 600 97 225 + 36% of taxable income above 410 460
555 601 – 708 310 149 475 + 39% of taxable income above 555 600
708 311 – 1 500 000 209 032 + 41% of taxable income above 708 310
1 500 001 and above 533 625 + 45% of taxable income above 1 500 000
Primary Rebate R13 635
Secondary (Persons 65 and older) R7 479
Tertiary (Persons 75 and older) R2 493
The tax thresholds at which liability for normal tax commences, are:
Persons under 65 R75 750
Persons of 65 – 74 years R117 300
Age 75 and older R131 150
Medical Tax Credits (MTC)
Main Member R303
First Dependant R303
Each Additional Dependant R204
FREE online salary tax calculator
Want to know whether the 2017/2018 Budget Speech will cost you more at the end of every month?
You can simply check online with our latest salary tax calculator. All you need to do is to simply enter your current monthly salary and your monthly or annual allowances.
You will then be able to view what your tax saving or liability will be in the 2076/2018 tax year.
Online Travel Logbook
Online Our SARS compliant online travel logbook allows you to keep track of your travel claims throughout the year and view a summary at the end of the tax year. All you need to do is simply enter your kilometres travelled, destination details and rate of reimbursement, easy!
Remember to sms your car’s kilometre reading as on 28 February 2018 to your own cellphone for safe keeping.
Read the Budget Speech Transcript
To read the 2017/2018 Budget Speech, click here.
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