Increased excise duties on tobacco and alcohol products expected to raise R 1bn
Adjustment of income tax rebates increase the tax thresholds for individuals
Income tax brackets not adjusted for inflation thus government will raise R12.8bn
General fuel levy increases by 15 cents per litre and Road Accident Fund levy increases by 5 cents per litre on 3 April 2019
A carbon fuel levy at 9 cents per litre on petrol and 10 cents per litre on diesel will be introduced with effect from 5 June 2019
Government will set aside R 23bn a year to support Eskom during its reconfiguration, subject to the appointment of an independent Chief Reorganisation Officer (CRO) to be jointly approved by the Ministers of Finance and Public Enterprises
Government revised the contingency reserve up towards R 13bn for 2019/20 to respond to possible requests for support from other state-owned enterprises (SOE's)
Expected revenues for 2019 to be around R 1.58 trillion and spending of R 1.83 trillion – a R 243bn loss
Changes coming to SARS
R 567bn allocated for social grant payments
Consolidated Government expenditure of R 1.83 trillion to be spent as follows:
· R 209.2bn on Economic Development
· R 386.4bn on Learning and Culture
· R 211bn on Peace and Security
· R 222.6bn on Health
· R 65.3bn on General Public Services
· R 208.5bn on Community Development
· R 202.2bn on Debt-Service costs
· R 278.4bn on Social Development
Individual and special trusts tax rates for the period 1 March 2019 to 29 February 2020
Trusts other than special trusts taxed at 45%
Tax Thresholds and Rebates (Something goodJ):
| OUTvest Tip: Make sure you understand the impact of the tax brackets on your income and don’t be caught off guard. Try to manage your debts and consider a retirement annuity to help reduce your tax liability. |
These are some of the more common taxes applicable to a large number of investments out there. There were no proposed changes to these taxes in the 2019 National Budget.
| OUTvest Tip: Consider investing in a Tax Free Savings Account (TFSA) like the OUTvest Tax Free Plan where none of these taxes apply. Just remember that in a TFSA you can only contribute R 33 000 p.a. in a tax year (1 March to 28/29 February) click here to learn more |
Donations tax
An individual can donate up to R 100 000 per year without being liable for donations tax of 20%. Donations between spouses is exempt from Donations tax.
| OUTvest Tip: Structure your affairs smartly from a tax perspective and take full advantage from donations between spouses. Get some good advice. |
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 on amounts above R 30 million.
| OUTvest Tip: It is always good to review your estate plan annually and update your will. |
Transfer Duty
If you are planning to buy a property this year here’s what you can expect to pay in transfer duty.
| OUTvest Tip: When buying a property it is often the additional little costs that add up, like transfer duty. Make sure you build this into your equation when buying a property. If the total property price is too high consider some saving options to help build up a nice deposit to be used towards covering the transfer duty costs. |
Amounts contributed to pension, provident 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 of R 350 000 or 27.5% of taxable income before the inclusion of a taxable capital gain.
Contributions to retirement funds (Pension, Provident and Retirement Annuities) are great ways to save tax.
| OUTvest Tip: If you want to save or reduce your annual tax liability and even get something back, consider contributing to or increasing your current contributions to retirement funds (within limits). |
For all the low down on the 2019 National Budget Speech visit the National Treasury’s website. The entire speech along with some in depth information about the economy and the 2019 tax year can be found on the site.
In a nutshell “…this is a Budget that plants a seed for renewal and growth……..it’s a budget for the future”– Tito Mboweni
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 free investing.