Highlights of the 2012 tax budget speech by Pravin Gordhan
The 2012 budget speech of Mr Pravin Gordhan highlighted higher tax scales for the higher income group in South Africa.
Here is some of the budget changes and proposals.
TAX CALCULATION FOR NATURAL PERSONS AND SPECIAL TRUSTS - 2012/2013
Follow the link below for the 2012/2013 tax tables.
SARS Tax tables for 2012/2013
1. TAX THRESHOLDS
Below age 65 - R 63, 556
Age 65 and over - R 99,056
Age 75 and over - R 110,889
2. INTEREST AND FOREIGN DIVIDEND EXEMPTION
Exemptions stayed the same than the previous tax year, are as follows:
Below age 65 - R 22,800
Age 65 and over - R 33,000
Foreign dividends - R 3,700
It is proposed that a cap of R 30,000 per year, with a lifetime limit of R 500,000 per taxpayer, be placed on aggregate annual contributions, to ensure high net-worth individuals do not benefit disproportionately.
3. SMALL BUSINESS CORPORATIONS
The tax rates applicable to small business corporations, effective for years ending on or after 1 April 2012:
Taxable income (Rate of tax)
R 0 - R 63,556 (0%)
R 63,557 - R 350,000 (7% of amount more than R 63,556
and less than R 350,000)
R 350,001 and above (R 20,051 + 28% of the amount
above R 350,000)
4. DIVIDEND WITHHOLDING TAX
With effect from 1 April 2012, the Secondary tax on companies (STC) will be replaced by a Dividend withholding tax (DWT).
The proposed rate is 15%, 5% higher than the 10% of previous years.
5. MEDICAL AID CONTRIBUTIONS AND EXPENSES
For taxpayers under the age of 65, the medical tax credit regime replaces the previous medical aid contribution deduction. This will be effective as from 1 March 2012.
The new tax credit system will bring about greater equality across income levels in terms of tax relief for medical aid contributions.
This tax credit system will only apply to taxpayers under the age of 65. Taxpayers who are 65 years and older will, for the time being, continue to enjoy a full deduction for all their medical related expenses.
As it stands, the tax credit for the taxpayer and the first dependent is R230 and R 154 for each additional dependent. The way in which this works is that the “credit” will be deducted from the taxpayers’ final liability in the same way in which the tax rebates are treated.
In addition to this:
• taxpayers under the age of 65 may deduct their out of pocket medical expenses plus the amount of their medical scheme contributions that exceed four times the medical tax credit to which they are due, as, in aggregate, exceed 7.5% of the taxpayers’ taxable income.
• taxpayers with disabilities (including their spouses or children with disabilities) may deduct their full out of pocket expenses as well as the amount of their medical scheme contributions that exceed four times the medical tax credits to which they are due.
6. CAPITAL GAINS TAX (CGT)
An increase to capital gains tax inclusion rates has been proposed , with effect from 1 March 2012:
Individuals & special trusts 25% to 33.3%
Companies and other trusts 50% to 66.6%
The exclusion amount increased to the following amounts:
Individuals & special trusts R 20,000 to R 30,000
On death R 200,000 to R 300,000
Primary residence R 1.5m to R 2m
The 2011 Budget proposed a withholding tax on gambling winnings above R25 000. After broader consultation, a national gambling tax based on gross gambling revenue will be introduced. This tax, effective from 1 April 2013, will take the form of an additional 1% national levy on a uniform provincial gambling tax base. A similar tax base will be used to tax the national lottery
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