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New taxes for the wealthy, some tax relief for low to middle-income earners, and a big boost for small business owners.<\/p>\n
That\u2019s the broad thrust of the tax plans unveiled on Wednesday by Finance Minister Pravin Gordhan, who also announced that a dedicated ombud would be appointed to deal with tax matters that couldn\u2019t be resolved by Sars.<\/p>\n
Although Gordhan left personal income tax rates unchanged, he announced a whopping 28 cents a litre increase in the price of petrol and diesel from April 4, when the general levy on fuel goes up by 20c a litre and the Road Accident Fund levy by 8c to 88c a litre. The electricity levy will go up by one cent a kilowatt hour from July 1.<\/p>\n
Gordhan announced R9.5 billion in personal income tax relief, more than half of which will go to people earning up to R22 000 a month to help offset the effects of inflation on earnings.<\/p>\n
Tax credits for medical aid contributions will kick in from March 1 at a rate of R230 a month for the first two beneficiaries and R154 each for additional ones.<\/p>\n
And to encourage people to save more \u2013 over and above retirement savings \u2013 it will be possible to put away R30 000 a year up to a lifetime limit of R500 000 and pay no tax on interest, dividends and capital gains.<\/p>\n
The rich, however, will have to cough up when withholding tax on dividends from investments, at a rate of 15 percent, is implemented from April 1.<\/p>\n
The capital gains inclusion rate for individuals and special trusts goes up from 25 to 33.3 percent on March 1, while for companies and other trusts it will increase from 50 to 66.6 percent.<\/p>\n
Middle-income earners will be protected by the raising of exclusion thresholds.<\/p>\n
Small business owners and entrepreneurs win big, with the tax-free threshold being raised to R63 556, above which \u2013 up to R350 000 \u2013 the 10 percent tax rate drops to 7 percent, offering welcome relief to micro enterprises and start-ups. Above R350 000, the 28 percent corporate tax rate applies.<\/p>\n
Micro businesses with an annual turnover of less than R1 million will struggle with far less red tape by being able to pay turnover tax, VAT and employees\u2019 tax twice a year \u2013 instead of submitting returns 18 times a year.<\/p>\n
New tax incentives in- clude relief for housing developers and employers who provide homes costing less than R300 000 and for businesses that invest in planned special economic zones.<\/p>\n
Tax dodgers, especially in the construction industry \u2013 and complex trusts \u2013 are to come under closer scrutiny.<\/p>\n
Gordhan shocked MPs when he said some of the 34 000 tax advisers owed more than R260m in back taxes, with more than 18 000 of their income tax returns outstanding.<\/p>\n
\u201cIf that is their attitude to their own tax compliance, one shudders to think what advice they are giving to their clients,\u201d the former Sars commissioner said.<\/p>\n
In the financial year ending March 31, more than 230 taxpayers had been successfully prosecuted and sentenced to a combined 370 years and nearly R5m in fines.<\/p>\n
\u201cA further 1 500 tax-related cases are awaiting prosecution with the National Prosecuting Authority,\u201d Gordhan said.<\/p>\n
Sars had slapped penalties on more than 700 000 taxpayers for failing to submit their returns on time.<\/p>\n
The recent voluntary disclosure programme had drawn 18 000 applications, yielding almost R1bn in extra tax and providing \u201cuseful insights into areas of non-compliance that will receive focused attention\u201d.<\/p>\n
The tax threshold \u2013 what one has to earn before having to pay income tax \u2013 rises from R59 750 a year for people under 65 to R63 556. People over 65 will start paying only once their earnings top R99 056 (up from R93 150).<\/p>\n
Of the 11 million employed people, 4.9 million pay no income tax, while the top-earning 2.5 percent contribute 37 percent of income taxes, according to the Budget Review.<\/p>\n
Personal income tax \u2013 payments by individuals and trusts \u2013 for the 2012\/13 tax year is to contribute R296bn or 37 percent of national government revenue.<\/p>\n
Corporate income tax is to contribute R168bn and VAT R210bn to the national coffers.<\/p>\n
The provinces are to raise R105bn in the year. – The Star<\/p>\n