South African finance minister Pravin Gordhan delivered the 2016 Budget on Wednesday afternoon. It was never pegged as being an easy task given the tough economic times the country is experiencing and that any wrong move could result in South Africa receiving a “junk status” rating. He did however manage to avoid an austerity budget, instead relying on structural measures to reignite economic growth. Many have questioned whether the middle ground approach to these structural reforms is too slow to stimulate the economic growth we need.
In this article we will be covering some of the highlights from the 2016/2017 budget speech:
Personal income tax:
The finance minister’s approach to personal taxation has been seen as very fair with no increase to personal taxation rates and even a decrease for lower and middle-income brackets.
Corporate tax rate:
The corporate tax rate remained unchanged at 28% with an awareness that changing this rate might negatively affect corporate investment in South Africa.
Any smokers and drinkers will be used to the ‘above inflation’ related taxes added to alcoholic and tobacco products however a new sin tax has been announced affecting sugar-sweetened beverages. This will be introduced in April next year and while no set amount has been confirmed, it could be in the region of 20%.
For now, the increases are:
Beer (340ml) – 8.5% increase from 124cents to 135cents
Wine (1 litre) / Sparking wine (1 litre) – 8% increase (24c / 78c)
Spirits (750ml) – 8.2% (394 cents)
Cigarettes (pack of 20) – 6.7% increase from R12.43 to R13.24
Ciders / Alcoholic fruit beverages – 8.5% increase( R6.21 / litre)
Cigars – 6.7% increase (R4.68 for 23g)
Pipe smokers – 7% increase (27cents for 25g)
No relief for motorists with an increase of 30.5 cents per litre on the fuel levy.
Capital Gains tax:
The effective rates for individuals and companies have risen:
Individuals: increased from 13.7% to 16.4%
Companies: increased from 18.6% to 22.4%
The property transfer duties have been increased but only for property sales over R10 million. On the 1st March 2016, they will increase from 11% to 13%.
It was announced that specific rules of the Tax Law Amendment Act have been postponed.
The VAT rate has not changed but it was suggested that there may be a VAT rate hike in the medium term.
Tax pocket Guide:
For the latest tax tables and other useful information, download our Pocket Tax Guide here.
If you are unsure about how any of these changes may have affected you or your business, contact us to setup a meeting.
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