2018 Budget Speech

Finance Minister Malusi Gigaba’s Budget Speech has seen him make “difficult decisions” to address a revenue shortfall and to fund free higher education.

The biggest news was that VAT was increased from 14% to 15% – the first time since 1993 that there has been an increase to the VAT rate. One thing everyone always looks out for is the tax rates. Gigaba announced a “below inflation increase” for income tax.

According to Gigaba’s budget, an additional R36bn of tax will be generated this year through the adjustments to income tax and other measures. The increase in income tax alone is expected to contribute an additional R6.8bn.

Personal income tax remains one of the biggest earners for government.  It is estimated that income tax will bring in R505.8bn in revenue, VAT, meanwhile, will bring in R348bn and company tax R231bn.

So, to recap, things are going to get more expensive.

  • VAT will increase to 15%
  • Duties on luxury goods and estate duty on wealthy individuals
  • Estates above R30m will now be taxed at a rate of 25%.
  • Fuel levy will increase by 52c per litre, effective 4 April 2018.
  • Carbon tax will be implemented from 1 January 2019
  • Fee-free higher education amounts to R57 bn over the next three years. This year,  R12.4bn will be allocated to poor students.
  • Social grants increase by 7% on average.
  • Sin tax increases. It’s between  6% and 10% for alcohol. Tobacco products will increase by 8.5%.
  •  A provisional allocation of R6bn will be set aside in 2018/19 (R10bn over three years) for things like drought relief and augmenting public infrastructure.

Tax Proposals

Taxable income in ZAR Tax rate in ZAR
0 – 195 850 18% of taxable income
195 851 – 305 850 35 253 + 26% of taxable income above 195 850
305 851 – 423 300 63 853 + 31% of taxable income above 305 850
423 301 – 555 600 100 263 + 36% of of taxable income above 423 300
555 601 – 708 310 147 891 + 39% of of taxable income above 555 600
708 311 – 1 500 000 207 448 + 41% of taxable income above 708 310
1 500 001 and above 532 041 + 45% of taxable income above 1 500 000
The personal income tax rebates are increased and the bottom three personal income tax brackets are adjusted to provide partial relief for the effect of inflation.

Tax threshold before being required to pay income tax

Tax threshold Amount ZAR
Below age 65 R78 150
Age 65 to 74 R121 000
Age 75 and over R135 300

Tax rebates for individual taxpayers

Tax rebates Amount in ZAR
Primary (age below 65) R14 067
Secondary (age 65 and over) R7 713
Tertiary (age 75 and over) R2 574

Trusts other than special trusts: rate of Tax 45%

Medical Tax Credits (MTC)

Main Member                          R310

First Dependent                      R310

Each Additional Dependent    R209

 

Read the Budget Speech Transcript

To read the 2018/2019 Budget Speech, click here.

Download a Printable Tax Highlights Guide

 

©Copyright 2018,CentsAccountability. No part of this publication may be reproduced or transmitted in any form, or by means electronic or mechanical, including recording, photocopying, or via a computerized or electronic storage or retrieval system, without permission granted in writing from the publisher. The information and opinions provided in this publication are believed to be accurate and sound, based on the best judgment available to the researchers. The publisher is not responsible for any errors or omissions.

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