In his 2023 National Budget Speech, our finance minister Mr Enoch Godongwana cited “The lack of reliable electricity supply is the biggest economic constraint” and in response proposed a total debt-relief arrangement of R 254 billion to Eskom.
With the advent and advancement of “Green Technologies” government have recognised the need to encourage and incentivize businesses and individuals to invest in renewable energy. New tax incentives have been proposed in this regard.
In the face of unprecedented load shedding it is encouraging to see that government has set aside funds to support urgent steps towards keeping the lights on, something all South Africans desperately seek.
Some Highlights of the 2023 SA National Budget
- Tax relief through adjusting the personal income tax brackets and rebates to account for the effect of inflation.
- The 2023 Budget proposes a major debt relief arrangement for Eskom to address its persistently weak financial position and enable it to conduct the necessary investment and maintenance.
- An expanded tax incentive for businesses of 125% of the cost of renewable energy assets used for electricity generation, brought into use during a period of 2 years from 1 March 2023.
- A tax rebate to individuals for rooftop solar panels of 25% of the cost for available for one year, subject to certain conditions, and capped at R15 000 per individual.
- Tax relief totalling R13 billion in 2023/24 to support the clean energy transition, increase the electricity supply and limit the impact of consistently high fuel prices amongst others.
- R 4 billion in relief for individuals that install solar panels, and R 5 billion to companies through an expansion of the renewable energy tax incentive.
- Extend the COVID-19 social relief of distress grant until 31 March 2024.
- Improve investment in local and provincial government infrastructure.
- Increases of 4.9% in excise duties on alcohol and tobacco.
- No increase in the general fuel levy.
- No Increase in the Road Accident Fund levy.
Where will the Tax Revenue come from in 2023?
How Government will spend the 2023 Budget
A welcome tax relief for individuals with an inflationary increase applied to the 2023 tax brackets.
Individuals and special trusts
Tax rates for the period 1 March 2023 to 29 February 2024
Tax Thresholds and Rebates (2023/2024)
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. No proposed changes were made to these taxes for the 2023 tax year.
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 were introduced in the 2023 budget.
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 at 25% of the dutiable value above R 30 million. No changes were suggested in the 2023 budget.
If you are planning to buy a property in 2023, here’s what you can expect to pay in transfer duty. Some welcome relief from the 2022 tax year.
Retirement Fund Lump Sum Benefits and Withdrawals
In taking into account the effects of inflation, the tax free portions of a lump sum from retirement funds (Pension funds, Provident funds, Preservation funds and Retirement Annuities) at withdrawal and at retirement has been increased as follows:
Retirement Fund lump sum withdrawal benefits
Retirement Fund lump sum benefits or severance benefits
The additional R 50 000 tax free lump sum portion at retirement provides some relief, giving the retiree a much needed boost to their retirement planning.
It is important to note that these tables are cumulative in nature, meaning that all withdrawals you make in your life time from retirement funds will affect and reduce the tax free portion you are entitled to at retirement. It also means if you previously accessed these lump sums and exceeded these thresholds you can’t go back. Thus the tax free portion is a once off amount and does not apply in isolation. It is important as far as possible to try and preserve instead of withdrawing from your retirement funds.
Good news, contributions made to Retirement Funds are great ways to save tax and get something back!
Tax Free Savings Accounts
In the 2023 Tax year, natural persons can still 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 2023 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.
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.