Proceeding with Caution
“Supporting the recovery and building for the future” was the message and theme emanating from the 2022 National Budget Speech delivered by our Finance Minister, Mr Enoch Godongwana.
It was all done and dusted in just under an hour with some similarities to the 2021 budget. The most notable: the welcome absence of an increase in the personal income tax rates and hence continued relief for South African taxpayers, who have endured so much over the last 12 months.
All in all it was a budget that, according to Mr Godongwana, was designed to try strike a balance between saving lives and livelihoods while supporting inclusive growth. Risks to South Africa’s economic recovery still remain high and we as a country need to proceed with caution as we build for the future.
SA Budget 2022 Highlights
- No increase in personal income tax rates
- Tax relief through adjusting the personal income tax brackets and rebates to account for the effect of inflation
- Tax revenue for 2021/22 expected to reach R 1.55 Trillion - well above projections
- R 5.2 billion in tax relief to help support the economic recovery
- No increase in the general fuel levy
- No Increase in the Road Accident Fund Levy
- Consolidated budget deficit projected to narrow from 5.7% of GDP in 2021/22 to 4.2% of GDP in 2024/25
- Progress continues in rebuilding the South African Revenue Services (SARS)
- Company income tax reduced to 27% for tax years ending on or after 31 March 2023
- Increases of between 4.5% and 6% in excise duties on alcohol and tobacco
- Retirement Funds Reform
- More details to follow in 2022 on proposed changes to greater preservation and access to cash in times of emergencies from retirement funds through the proposed “Two Pot System”
- Proposed changes to Regulation 28 of the Pension Funds Act expected to be gazetted in March 2022
Where will the Tax Revenue come from in 2022?
|
Sources |
2022 |
2021 |
|
Personal Income Tax |
R 587.9 bn |
R 516.0 bn |
|
VAT |
R 439.7 bn |
R 370.2 bn |
|
Corporate Income Tax |
R 269.9 bn |
R 213.1 bn |
|
Custom and Excise Duties |
R 117.4 bn |
R 100.5 bn |
|
Fuel Levies |
R 89.1 bn |
R 83.1 bn |
|
Other |
R 94.5 bn |
R 82.2 bn |
How Government will spend the 2022 Budget
|
Sectors |
2022 |
2021 |
|
Learning and Culture |
R 441.5 bn |
R 409.9 bn |
|
Social Development |
R 364.4 bn |
R 335.3 bn |
|
Debt – Service costs |
R 301.8 bn |
R 269.7 bn |
|
Health |
R 259.0 bn |
R 248.8 bn |
|
Community Development |
R 236.3 bn |
R 218.8 bn |
|
Peace and Security |
R 220.7 bn |
R 208.7 bn |
|
Economic Development |
R 227.1 bn |
R 207.5 bn |
|
General Public Services |
R 69.2 bn |
R 68.5 bn |
|
Contingency Reserve |
R 10.0 bn |
R 12 bn |
Income Tax Brackets
A welcome relief with an inflationary increase applied to the 2022 tax brackets.
Individuals and special trusts
Tax rates for the period 1 March 2022 to 28 February 2023
|
Taxable Income (R) |
Rate of Tax (R) |
|
1- 226 200 |
18 % of taxable income |
|
226 001 – 353 100 |
40 680 + 26% of taxable income above 226 000 |
|
353 101 – 488 700 |
73 726 + 31% of taxable income above 353 100 |
|
488 701 – 641 400 |
115 762 + 36% of taxable income above 488 700 |
|
641 401 – 817 600 |
170 734 + 39% of taxable income above 641 400 |
|
817 601 – 1 731 600 |
239 452 + 41% of taxable income above 817 600 |
|
1 731 601 and above |
614 192 + 45% of taxable income above 1 731 600 |
Tax rates for the period 1 March 2021 to 28 February 2022
|
Taxable Income (R) |
Rate of Tax (R) |
|
1- 216 200 |
18 % of taxable income |
|
216 201 – 337 800 |
38 916 + 26% of taxable income above 216 200 |
|
337 801 – 467 500 |
70 532 + 31% of taxable income above 337 800 |
|
467 501 – 613 600 |
110 739 + 36% of taxable income above 467 500 |
|
613 601 – 782 200 |
163 335 + 39% of taxable income above 613 600 |
|
782 201 – 1 656 600 |
229 089 + 41% of taxable income above 782 200 |
|
1 656 601 and above |
587 593 + 45% of taxable income above 1 656 600 |
Tax Thresholds and Rebates:
2022
|
Age |
Rebate Type |
Rebates (R) |
Tax Threshold |
|
Below 65 |
Primary |
R 16 425 |
R 91 250 |
|
Age 65 to below 75 |
Secondary |
R 9 000 |
R 141 250 |
|
Age 75 and over |
Tertiary |
R 2 997 |
R 157 900 |
2021
|
Age |
Rebate Type |
Rebates (R) |
Tax Threshold |
|
Below 65 |
Primary |
R 15 714 |
R 87 300 |
|
Age 65 to below 75 |
Secondary |
R 8 613 |
R 135 150 |
|
Age 75 and over |
Tertiary |
R 2 871 |
R 151 100 |
Capital Gains Tax (CGT), Dividend Withholding Tax (DWT) and the Interest exemption
Some of the more common taxes applicable to a large majority of investments are Capital Gains Tax, Dividend Withholding Tax and taxation on interest earned. More good news, there were no proposed changes to these taxes for the 2022 tax year. In summary:
Donations Tax
A natural person can donate up to R 100 000 per tax year without being liable for donations tax of 20%. Donations between spouses is exempt from Donations tax. No changes we introduced in the 2022 budget.
Estate Duty
In the event of an individual’s death, estate duty is applied to all property of a South African resident as well as South African property belonging to a non-resident less allowable deductions. If your total deceased estate is less than R 30 million you will pay 20% estate duty and where it exceeds R 30 million 25% estate duty will apply. No changes were suggested here in the 2022 budget.
Transfer Duty
If you are planning to buy a property in 2022 here’s what you can expect to pay in transfer duty. Again some good news as no changes were introduced to these rates in the 2022 budget.
|
Value of Property (R) |
Rate |
|
0 – 1 000 000 |
0% |
|
1 000 001 – 1 375 000 |
3% above the value R 1 000 000 |
|
1 375 001 – 1 925 000 |
R 11 250 + 6% of the value above R 1375 000 |
|
1 925 001 – 2 475 000 |
R 44 250 + 8% of the value above R 1 925 000 |
|
2 475 001 – 11 000 000 |
R 88 250 + 11% of the value above R 2 475 000 |
|
11 000 001 and above |
R 1 026 000 + 13% of the value above R 11 000 000 |
Retirement Fund Contributions
Amounts contributed to pension funds, provident funds and retirement annuities can be deducted within limits during a tax year to reduce your tax liability. You can even get money back if you plan smartly. The maximum retirement fund contribution an individual can make is limited to 27.5% of the greater of remuneration for PAYE purposes or taxable income (both excluding retirement fund lump sums and severance benefits). It is further limited to the lower or R 350 000 or 27.5% of taxable income before the inclusion of a taxable capital gain.
Contributions to retirement funds (Pension funds, Provident funds and Retirement Annuities) are great ways to save tax and even get something back.
Tax Free Savings Accounts
In the 2022 Tax year, natural persons can invest up to R 36 000 into a Tax Free Savings Account. The life time contribution limit remains unchanged at R 500 000. The OUTvest Tax Free Plan is a tax efficient investment vehicle in which an investor pays no tax on any growth or withdrawals from the Tax Free Plan.
Useful links to the 2022 National Budget
For the latest on the 2022 National Budget Speech visit the National Treasury’s website.
When it comes to investing, understanding the taxes you pay can help you make smarter investment decisions that could save you real money in the long run. Give one of our skilled advisors a call on 0860 688 837 or click here to learn more about tax savvy investing.
Gareth van Deventer CFP®
This article does not constitute financial advice and does not take into account one’s personal financial circumstances. Please contact OUTvest before implementing any financial plan or advice to ensure that you make an informed decision. Although we have tried to set out some key information to consider, we are not tax professionals and we suggest you speak to your tax consultant for any advice on your personal tax. OUTvest is a licensed FSP. Ts and Cs apply. All investments are exposed to risk, not guaranteed and dependent on the performance of the underlying assets.