Mazars - Budget 2015: unexpected changes and some good news:Dave Bates, Diane Seccombe and Marc Goudge
Mazars - Budget 2015: unexpected changes and some good news:Dave Bates, Diane Seccombe and Marc Goudge



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Mazars - Budget 2015: unexpected changes and some good news

2015-04-22

This year's Budget had some unexpected tax changes, and also some surprisingly good news.

According to Di Seccombe, National Head of Tax Training for global audit, tax and advisory firm Mazars, it is estimated that tax changes will bring in another R8.3 billion to the fiscus. This is despite earlier speculation that it could be anywhere from R11 billion to R15 billion.

Speaking at a Budget Breakfast in Cape Town last week, Seccombe said that the Budget Review has to be read in the context of any reports from the Davis Tax Committee to form an opinion about what will end up in the 2015 Tax Laws Amendment Bill.

"It seems that whenever the Davis Committee raises a concern about a potential area of tax leakage, government steps in and starts talking about anti-avoidance and punitive legislation," Seccombe said.

Taxing the wealthy

The one area of government revenue that the Committee still has to review is wealth taxes such as trusts, estates and capital gains tax. "There was a warning shot for trusts in the Budget Speech, but that is nowhere near what we believe is to come."

Retirement annuity funds are also on government's radar, particularly when used as a means of paying less estate duty.

Overall individuals and trusts are now bearing a heavier tax burden than companies. In Trevor Manuel's time, this was the reverse. However, the global financial crisis and subsequent downturn has left companies with lower profits to tax.

High income earners in particular will have to pay more income tax. The top tax bracket now starts at R701 301. Up to this amount, individuals will pay tax of R208 587, or an average rate of approximately 29.7%. In addition, for every R1 earned over that threshold, they will now pay 41% of that rand in tax.

Last year the tax brackets were widened more and marginal taxes were unchanged. As a result, higher income individuals enjoyed a tax saving last year.  However, this year they will pay more.  "For the first time we're seeing tax payers not only losing their tax savings but also paying in more tax."

Another change likely to affect wealthier South Africans is the new transfer duty rates. While properties purchased for up to R750 000 will not attract transfer duty, at the top end of the market transfer duty will be higher than it has ever been over the past 4-5 years.

"Those able to purchase a home over between R1,25 million and R1,75 million will have to pay 8% transfer duty, and homes over R2.25 million - which is not a very high price tag in today's market - will attract a hefty 11% in transfer duty."

Those driving heavier, luxury cars will also feel the 80.5 cents per litre hike in the fuel levy.

The good news is that South Africans over the age of 65 able to afford medical aid will get an additional rebate on their contributions. For those still working in their golden years, they will be able to use both rebates to reduce their PAYE. At the very least, the additional rebate will help reduce provisional tax.

Diane Seccombe, 083-409-5971, diane.seccombe@mazars.co.za; or Koogan Pillay (Corporate Communications), 021-818-5278;084-656-9162, koogan.pillay@mazars.co.za

Contact Claire Densham
Communications:021-552-9935,
Catherine Riley: 073-238-1753,
catherine@cdcom.co.za or

Claire Densham:
082-906-3201,
claire@cdcom.co.za




Mazars - Budget 2015: unexpected changes and some good news

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