2017 Budget highlights
- A new personal income tax of 45% is introduced for natural persons with a taxable income exceeding R1 500 000. Over 100 000 taxpayers will be affected by the new bracket. The previous top bracket of 41% was R701 301.
- Rate of tax for trusts (other than special trusts which are taxed at rates applicable to natural persons) has been increased from 41% to 45%.
• Dividends tax rate increase from 15% to 20%, which is effective, 22 February 2017. This has resulted in a corporate effective rate of tax of 42.4%.
•A foreign dividend may qualify for the ratio exemption to the extent that it does not qualify for the following exemptions;-participation exemption, -country-to-country exemption- controlled foreign company exemption, or -JSE exemption.
The exemption ratio is calculated as follows:
-The ratio is 25/45 (previously 26/41) if the receiving person is a natural person, deceased or insolvent estate or trust.
-the ratio is 8/28 (previously 13/28). The effective date for foreign dividend tax is 1 March 2017.
- Primary, secondary, and tertiary rebates, all taxable income brackets & tax-free thresholds will increase by 1%.
- Limited relief for bracket creep. The brackets are adjusted for inflation only.
- A tax-free investment is a financial instrument owned by a natural person and provides for an exemption from normal tax of all amounts received from a `tax-free investment. Financial institutions have products classified as `tax-free’.
A natural person is allowed to contribute up to R33 000 (previously R30 000) cash during a year of assessment to these investment and a lifetime contribution of R500 000.
- The general fuel levy will increase by 30 cents per litre on 5 April 2017 and 9 cents per litre on the road accident fund levy.
- New excise tax burden are as follows:
-A rate of R3.61 per litre for unfortified wine – increase of 23 cents per 750ml.
-A rate of R11.46 per litre for sparkling wine – increase of 70 cents per 750ml.
– A rate of R14.30 for a pack of 20 cigarettes – increase of 106 cents.
– Beer to increase by 12 cents per 340ml.
- The proposed tax on sugary beverages will be implemented when Parliament passes the appropriate legislation.
-sugar content will remain the main base on which tax is applied.
-The proposed tax rate will be 2.1c/gram for sugar content in excess of 4g/100ml.
-Of the proposed rate, 50 per cent will apply to concentrated beverages.