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Budget 2019 – the changes affecting you

February 20, 2019

Finance Minister Tito Mboweni delivered his maiden budget this afternoon which offers little in the way of relief from the tax hikes of previous years. It also involves a surprise carbon levy pushing fuel prices even higher.

 

Read on to learn about the changes affecting you:

Income Tax Changes:

For the first time since the 1990s, there will be no adjustment for inflation in the income tax brackets. This means that if your salary has increased to match inflation, you could potentially slip into a higher tax bracket and pay more tax.

There have however been small increases in the tax thresholds for individual tax payers, meaning you will have to earn a little more to be taxed on your income.

Employment Tax Incentive:

From next month, younger employees earning up to R4,500 per month can benefit from the employment tax incentive. Increasing from R4,000 per month, employers will be able to claim R1,000 per month in tax incentives for their younger employees.

Petrol and Diesel – New Tax:

Prepare for heavy increases to fuel prices later in the year as a carbon fuel levy is introduced on June 5th.

Petrol is set to increase by 29 cents per litre ( General fuel levy increase of 15c per litre + Road Accident Fund levy increase of 5c per litre + new carbon fuel levy addition of 9c per litre)

Diesel will be increasing by 30 cents per litre ( General fuel levy increase of 15c per litre + Road Accident Fund levy increase of 5c per litre + new carbon fuel levy addition of 10c per litre)

Sin Tax:

Alcohol – with the exception of sorghum beer – and tobacco products are set to increase:

  • Beer: The excise duty on a can increases by 12 cents to R1.74
  • Wine: A 750ml bottle will have an excise duty of R3.15, increasing by 22 cents
  • Sparkling Wine: The duty on a 750ml bottle increases by 84 cents to R10.16
  • Whiskey: The duty on a bottle will rise by R4.54 to R65.84
  • Cigars: Excise duty will increase by roughly 64 cents to R7.80
  • Cigarettes: A pack of 20 increases R1.14 to R16.66

Medical Aid Deductions:

The monthly amount that can be deducted for medical aid contributions has not been changed in order to help fund the rollout of the National Health Insurance. As medical aid offerings increase in price each year, this ultimately equates to you paying more for your medical aid when compared to previous years.

Sugar Tax:

Introduced last year as a ‘health promotion’ levy that applies to sugary cooldrinks that contain more than 4 grams of sugar per 100ml, the sugar tax has been increased from 2.1 cents per gram to 2.21 cents per gram of sugar.

Zero-rated Goods:

From 1 April 2019, cake flour, white bread flour, and sanitary pads will all be zero-rated for VAT.

Housing Subsidies for First-time Buyers:

While this is not something new, government will be taking direct control from the provinces and offer first-time home buyers subsidies through a ‘Help to Buy’ scheme. The initial pilot has been allocated R950 million over three years.

Social Grant Increases:

The social grants have increased to R1780 for state old age pensioners and R420 for child grants in April and R430 in October.

Concerned how a Budget change may affect you or your business?

Contact the tax experts at Dirmeik Consulting today and we will be able to advise on the implications of these changes.

Call us on:
Johannesburg: 010 007 3026,
Cape Town: 021 421 4444,
Durban: 031 007 0881


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