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.
|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|
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.
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