The Minister of Finance tabled National Treasury’s annual budget in Parliament on the 24th of February 2016. Below some of the more significant tax related matters to take note of which have been proposed:
- Capital gains tax inclusion rates are increased from 33.3% (individuals) and 66.6% (companies and trusts) to 40% and 80% respectively;
- Rates for VAT, Corporate Income Tax, Estate Duty and Securities Transfer Tax remain unchanged;
- Personal income tax relief has been announced for individuals across the board. In an unexpected move this will also be the case for wealthier individuals. An individual below the age of 65 would for example have paid income tax of R522,796 on taxable income of R1.5 million. For 2017, the same amount would attract tax amounting to R520,930;
- Treasury is considering the introduction of legislation later this year to, for estate duty purposes, potentially include assets in an individual’s estate which he/she had earlier sold to a trust on loan account (with a specific focus on interest free loan accounts);
- A new Transfer Duty rate of 13% is proposed for properties with a value in excess of R10 million;
- Share issue and buy-back transactions (commonly used as part of corporate restructurings) are to be addressed as part of an anti-avoidance effort;
- The tax treatment of subordinated loans will – with effect from 24 February 2016 – be changed through the introduction of legislation later this year. The expectation is that interest on these loans will going forward no longer be classified as dividends for tax purposes;
- The withholding tax on services fees paid to non-residents is to be scrapped;
- A new amnesty will apply from 1 October 2016, with a focus on prior exchange control contraventions; and
- Effective 1 April 2017, a new tax is to be introduced on what has been described as ‘sugar-sweetened beverages’.
We are committed thereto to keeping you informed of any changes in tax legislation that will have a bearing on your specific tax position.
This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)