March 2010
Workbook
Facilitated by CAP Chartered Accountants
The views expressed in this workbook are not necessarily reflective of the official views of Fasset.
CONTENTS
PART 1 – BUDGET 2010TAX PROPOSALS
HIGHLIGHTS
INDIVIDUALS
Tax tables 2010/11
Tax tables 2009/10
Rebates
Tax threshold
Tax saving per annum
Interest and taxable dividend exemption
Monthly monetary caps for tax-free medical scheme contributions
CGT exclusions (natural persons)
Travel allowance: deemed expenditure table (unchanged)
Subsistence allowance: deemed expenditure daily limits
RETIREMENT LUMP SUM BENEFITS
Pre-retirement lump sums
Retirement and death lump sums
CORPORATE TAX RATES
Normal tax (basic rate)
Tax rates for qualifying small business corporations
Presumptive turnover tax on micro businesses
Secondary tax on companies (STC)
Trusts
OTHER TAXES
Estate duty
Capital gains tax (CGT)
Transfer duty
Securities Transfer Tax
BUDGET COMMENTARY
Introduction
Overview
Main tax proposals
Relief for individuals
Personal income tax relief
Medical scheme contributions and medical expenses
Retrenchment packages
Savings
Discontinuation of the SITE system
Limiting salary-structuring opportunities
Company car fringe benefits
Employee deferred compensation and insurance schemes
Closure of sophisticated tax loopholes
Cross-border mismatches
Interest cost allocation for finance operations
‘Protected cell’ companies
Cross-border insurance payments
Participation preference and guaranteed shares
Restricting the cross-border interest exemption
Transfer pricing
Promoting South Africa as a gateway into Africa
Headquarter companies
Islamic-compliant finance
Depreciation allowances
Improvements on leased land
Environmental fiscal reform
Carbon dioxide vehicle emissions tax
VAT and residential property developers
Customs and excise duties: tobacco and alcohol
Gambling taxes
Fuel levies
General fuel levy
Road Accident Fund levy
Measures to enhance tax administration
Voluntary disclosure
Compliance
Miscellaneous tax amendments
Special relief measures
Business measures
International measures
Indirect tax measures
General administration
Technical corrections
Tax policy research agenda
Taxes upon death
Financial instruments and aggressive financial transactions
Environmental fiscal reform and the pricing of carbon
PART 2 – TAX UPDATE
DEVELOPMENTS OVER THE LAST YEAR
Tax judgments
Interest rate changes
AMENDMENTS TO THE LEGISLATION
INDIVIDUALS
TRAVEL ALLOWANCES
MEDICAL DEDUCTION AND MEDICAL AID CONTRIBUTIONS
TAX ON RETIREMENT FUND LUMP SUM BENEFITS
MINOR BENEFICIARY FUNDS
DEEMED INCOME
PUBLIC SECTOR PENSION FUNDS: PRE-1998 BENEFITS
CAPITAL GAINS TAX
TREATMENT OF UNREALISED GAINS ON DEATH
EXCLUSION OF CAPITAL GAINS AND LOSSES ON PRIMARY RESIDENCES
TRANSFER OF A PRIMARY RESIDENCE FROM A COMPANY OR TRUST
BUSINESSES
DEFINITIONS
FOREIGN TAX REBATE
PENSION SURPLUSES PAID TO EMPLOYERS
CONVERSION OF THE CONTROLLED FOREIGN COMPANY (CFC) RULING EXEMPTIONS
COLLECTIVE INVESTMENT SCHEMES IN SECURITIES: CONDUIT PRINCIPLES IN RESPECT OF ORDINARY DISTRIBUTIONS
REPEAL OF FOREIGN LOOP EXEMPTION
FILM CASH SUBSIDIES
FINANCE CHARGES
INTERNATIONAL SUBMARINE TELECOMMUNICATIONS CABLES
IMPROVEMENTS ON LEASED GOVERNMENT LAND
DEDUCTIBILITY OF EMPLOYER CONTRIBUTIONS TO RETIREMENT ANNUITY FUNDS
PRE-TRADE EXPENDITURE
DEPRECIATION ON IMPROVEMENTS
LEARNERSHIP ALLOWANCE
INDUSTRIAL POLICY PROJECTS ALLOWANCE
VENTURE CAPITAL COMPANY REFINEMENTS
EXEMPTION OF CERTIFIED EMISSION REDUCTION RECEIPTS
SPECIAL ALLOWANCE FOR ENERGY EFFICIENCY SAVINGS
EMPLOYER-PROVIDED POST-RETIREMENT MEDICAL SCHEME COVERAGE
MINING STOCKPILES
ADJUSTING RING-FENCING OF LOSSES FROM LEASING
CROSS-ISSUES
FOREIGN EXCHANGE TRANSACTIONS
MINING CAPITAL EXPENDITURE
TELECOMMUNICATIONS LICENSE CONVERSION
COMPANY REORGANISATIONS
DEEMED DIVIDENDS AND STC
DIVIDENDS TAX
DIVIDENDS TAX: WITHHOLDING
DIVIDENDS TAX: PRE-SALE DIVIDENDS/DIVIDENDS STRIPPING
DIVIDENDS TAX: VALUE EXTRACTION TAX
DIVIDENDS TAX: FOREIGN PORTFOLIO DIVIDENDS
SMALL BUSINESS RELIEF
OIL AND GAS INCENTIVES AND ANCILLARY TRADES
OFFSHORE SHORT-TERM INSURANCE RESERVES
CAPITAL GAINS TAX
CAPITAL DISTRIBUTIONS
COMPANY DISTRIBUTIONS IN SPECIE
SPECIALISED ENTITIES AND CIRCUMSTANCES
AGRICULTURAL TRUSTS
FSB CONSUMER EDUCATION FOUNDATION
PUBLIC BENEFIT ORGANISATIONS AND RECREATIONAL CLUBS
TRANSITIONAL PERIOD FOR REVISED TAXATION OF CLUBS
BODIES CORPORATE, SHARE BLOCK COMPANIES AND HOME OWNERS ASSOCIATIONS
CONVERTED S 21 COMPANIES
ESTATE DUTY
PORTABLE SPOUSAL DEDUCTION
ASSESSMENTS
LIABILITY OF EXECUTOR
TRANSFER DUTY
INDIRECT TAX TREATMENT OF SHARE BLOCK COMPANIES
COMPANY REORGANISATION RELIEF
VALUE-ADDED TAX
COMPANY REORGANISATION RELIEF
DEEMED SUPPLY FOR VAT PURPOSES
CHANGE IN USE ADJUSTMENTS
VOLUNTARY VAT REGISTRATION
ZERO-RATING OF SUPPLIES BY CRICKET SOUTH AFRICA
BIOMETRIC INFORMATION
TAX INVOICES
INTEREST
OFFENCES
OTHER TAXES
FUEL LEVY REVENUE
AIR PASSENGER DEPARTURE TAX
TAX ADMINISTRATION
ALLOCATION OF PAYMENTS
SECRECY PROVISION
DUTY TO FURNISH INFORMATION
PAYMENT OF TAX PENDING OBJECTION AND APPEAL
SETTLEMENT PROCEDURES
INTEREST ON LATE PAYMENT OF TAX
REPORTING UNPROFESSIONAL CONDUCT
REPORTING OF INFORMATION BY EMPLOYERS
PROVISIONAL TAX
SKILLS DEVELOPMENT LEVIES
DEFINITION OF “LEVY”
RETURN OF INFORMATION
ESTIMATED ASSESSMENTS
INTEREST ON LATE PAYMENT
PENALTIES
UNEMPLOYMENT INSURANCE CONTRIBUTIONS
DEFINITION OF “CONTRIBUTION”
RETURN OF INFORMATION
ESTIMATED ASSESSMENTS
INTEREST ON LATE PAYMENT
PENALTIES
2010 Budget and Tax Update – March 2010 / / 1
PART 1 – BUDGET 2010TAX PROPOSALS
HIGHLIGHTS
The notes that follow draw extensively from the SARS Budget Tax Proposals 2010/11 and Chapter 5of the 2010 Budget Review published by National Treasury.
INDIVIDUALS
Tax tables 2010/11
Taxable incomeR / Rate of tax
0 / - / 140 000 / 18%
140 001 / - / 221 000 / 25 200 / + / 25% of the excess over R140 000
221 001 / - / 305 000 / 45 450 / + / 30% of the excess over R221 000
305 001 / - / 431 000 / 70 650 / + / 35% of the excess over R305 000
431 001 / - / 552 000 / 114 750 / + / 38% of the excess over R431 000
552 001 / - / 160 730 / + / 40% of the excess over R552 000
Tax tables 2009/10
Taxable incomeR / Rate of tax
0 / - / 132 000 / 18%
132 001 / - / 210 000 / 23 760 / + / 25% of the excess over R132 000
210 001 / - / 290 000 / 43 260 / + / 30% of the excess over R210 000
290 001 / - / 410 000 / 67 260 / + / 35% of the excess over R290 000
410 001 / - / 525 000 / 109 260 / + / 38% of the excess over R410 000
525 001 / - / 152 960 / + / 40% of the excess over R525 000
Rebates
2010/11R / 2009/10
R / 2008/09
R
Primary / 10 260 / 9 756 / 8 280
Secondary / 5 675 / 5 400 / 5 040
Tax threshold
2010/11R / 2009/10
R / 2008/09
R
Below age 65 / 57000 / 54 200 / 46 000
Age 65 and over / 88528 / 84 200 / 74 000
The proposed changes to the tax tables and rebates eliminate the effects of inflation on income tax liabilities and result in a reduced tax liability for taxpayers at all income levels. These tax reductions are set out below:
Tax saving per annum
Age below 65
Taxable income / RR57 000 – R120 000 / 504
R150 000 – R200 000 / 1 064
R250 000 / 1 614
R300 000 / 2 114
R400 000 / 2 364
R500 000 / 2 994
R750 000 and above / 3 534
Age above 65
Taxable income / RR85 000 / 144
R90 000 – R120 000 / 779
R150 000 – R200 000 / 1 339
R250 000 / 1 889
R300 000 / 2 389
R400 000 / 2 639
R500 000 / 3 269
R750 000 and above / 3 809
Interest and taxable dividend exemption
2010/11R / 2009/10
R / 2008/09
R
Natural persons below age 65 / 22300 / 21 000 / 19 000
Age 65 and over / 32 000 / 30 000 / 27 500
Of the above, the amount that can be applied to foreign interest and dividends / 3 700 / 3 500 / 3 200
Monthly monetary caps for tax-free medical scheme contributions
2010/11R / 2009/10
R / 2008/09
R
First two beneficiaries / 670 / 625 / 570
Each additional beneficiary / 410 / 380 / 345
CGT exclusions (natural persons)
2010/11R / 2009/10
R / 2008/09
R
Annual exclusion for capital gains or losses / 17 500 / 17 500 / 16 000
Annual exclusion in year of death for capital gains or losses / 120 000 / 120 000 / 120 000
Primary residence exclusion for capital gains or losses / 1 500 000 / 1 500 000 / 1 500 000
Travel allowance: deemed expenditure table (unchanged)
Value of the vehicleR / Fixed cost
R / Fuel cost
c/km / Maintenance cost
c/km
0 / - / 40 000 / 14 672 / 58.6 / 21.7
40 001 / - / 80 000 / 29 106 / 58.6 / 21.7
80 001 / - / 120 000 / 39 928 / 62.5 / 24.2
120 001 / - / 160 000 / 50 749 / 68.6 / 28.0
160 001 / - / 200 000 / 63 424 / 68.8 / 41.1
200 001 / - / 240 000 / 76 041 / 81.5 / 46.4
240 001 / - / 280 000 / 86 211 / 81.5 / 46.4
280 001 / - / 320 000 / 96 260 / 85.7 / 49.4
320 001 / - / 360 000 / 106 367 / 94.6 / 56.2
360 001 / - / 400 000 / 116 012 / 110.3 / 75.2
400 001 / - / 116 012 / 110.3 / 75.2
Subsistence allowance: deemed expenditure daily limits
The following amounts will be deemed to have been actually expended by a recipient to whom an allowance or advance has been granted or paid –
2010/11R / 2009/10
R / 2008/09
R
Where the accommodation, to which that allowance or advance relates, is in the Republic and that allowance or advance is paid or granted to defray -
Incidental costs only / R85 per day / R80 per day / R73 per day
The cost of meals and incidental costs / R276 per day / R260 per day / R240 per day
Where the accommodation, to which that allowance or advance relates, is outside the Republic and that allowance or advance is paid or granted to defray the cost of meals and incidental costs, an amount per day determined in accordance with the following table for the country in which that accommodation is located -
Daily amount for travel outside the Republic
Country / Currency / AmountAlbania / Euro / 97
Algeria / Euro / 136
Angola / US $ / 191
Antigua and Barbuda / US $ / 220
Argentina / US $ / 75
Armenia / US $ / 279
Austria / Euro / 108
Australia / Aus $ / 175
Azerbaijani / US $ / 145
Bahamas / US $ / 191
Bahrain / B Dinars / 36
Bangladesh / US $ / 79
Barbados / US $ / 202
Belarus / Euro / 117
Belgium / Euro / 124
Belize / US $ / 152
Benin / Euro / 89
Bolivia / US $ / 53
Bosnia-Herzegovina / Euro / 112
Botswana / Pula / 799
Brazil / US $ / 133
Brunei Darussalam / US $ / 88
Bulgaria / Euro / 89
Burkina Faso / Euro / 100
Burundi / US $ / 138
Cambodia / US $ / 90
Cameroon / Euro / 100
Canada / Can $ / 156
Cape VerdeIslands / Euro / 88
Central African Republic / Euro / 96
Chad / Euro / 121
Chile / US $ / 105
Colombia / US $ / 94
Comoros / Euro / 85
Cook Islands / NZ $ / 391
Cote D'Ivoire / Euro / 124
Costa Rica / US $ / 62
Croatia / Euro / 105
Cuba / Euro / 107
Cyprus / Euro / 116
CzechRepublic / Euro / 80
Democratic Republic of Congo / US $ / 193
Denmark / Euro / 185
Djibouti / US $ / 99
Dominican Republic / US $ / 99
Ecuador / US $ / 92
Egypt / US $ / 90
El Salvador / US $ / 80
Equatorial Guinea / Euro / 130
Eritrea / US $ / 106
Estonia / Euro / 91
Ethiopia / US $ / 65
Fiji / US $ / 100
Finland / Euro / 140
France / Euro / 149
Gabon / Euro / 228
Gambia / Euro / 110
Georgia / US $ / 261
Germany / Euro / 107
Ghana / Euro / 110
Greece / Euro / 114
Grenada / US $ / 151
Guatemala / US $ / 85
Guinea / Euro / 78
GuineaBissau / Euro / 59
Guyana / US $ / 118
Haiti / US $ / 109
Honduras / US $ / 67
Hong Kong / HK $ / 1 000
Hungary / Euro / 80
Iceland / ISK / 30 320
India / US $ / 139
Indonesia / US $ / 86
Iran / US $ / 67
Iraq / US $ / 125
Ireland / Euro / 233
Israel / US $ / 122
Italy / Euro / 120
Jamaica / US $ / 151
Japan / Yen / 18 363
Jordan / US $ / 128
Kazakhstan / US $ / 103
Kenya / US / 102
Kiribati / Aus $ / 233
Korea / WON / 145 574
Kuwait / US $ / 152
Kyrgyzstan / US $ / 196
Laos / US $ / 100
Latvia / Euro / 74
Lebanon / US $ / 120
Lesotho / Rand / 750
Liberia / US $ / 97
Libya / US $ / 111
Lithuania / Euro / 154
Macau / HK $ / 1 196
Macedonia / Euro / 100
Madagascar / Euro / 107
Madeira / Euro / 290
Malawi / US $ / 70
Malaysia / US $ / 308
Maldives / US $ / 202
Mali / Euro / 101
Malta / Euro / 132
Marshall Islands / US $ / 255
Mauritania / Euro / 178
Mauritius / US $ / 215
Mexico / US $ / 86
Moldova / US $ / 165
Mongolia / US $ / 69
Montenegro / Euro / 109
Morocco / US $ / 106
Mozambique / US $ / 69
Myanmar (Burma) / US $ / 74
Namibia / Rand / 660
Nauru / Aus $ / 278
Nepal / US $ / 64
Netherlands / Euro / 127
New Zealand / NZ $ / 160
Nicaragua / US $ / 65
Niger / Euro / 99
Nigeria / Euro / 121
Niue / NZ $ / 252
Norway / NOK / 1 647
Oman Rials / Omani / 55
Pakistan / US $ / 53
Palau / US $ / 252
Panama / US $ / 108
Papa New Guinea / Kina / 285
Paraguay / US $ / 43
People’s Republic of China / US $ / 157
Peru / US $ / 111
Philippines / US $ / 92
Poland / Euro / 97
Portugal / Euro / 113
Qatar / Riyals / 523
Republic of Congo / Euro / 149
Reunion / Euro / 164
Romania / Euro / 78
Russia / Euro / 154
Rwanda / US $ / 119
Samoa / Tala / 243
Sao Tome / Euro / 86
Saudi Arabia Saudi / Riyal / 431
Senegal / Euro / 150
Serbia / Euro / 95
Seychelles / Euro / 275
Sierra Leone / US $ / 90
Singapore / Singapore $ / 180
Slovakia / Euro / 81
Slovenia / Euro / 73
Solomon Islands / SolIsland $ / 811
Spain / Euro / 109
Sri Lanka / US $ / 74
St. Kitts & Nevis / US $ / 227
St. Lucia / US $ / 215
St. Vincent & The Grenadines / US $ / 187
Sudan / US $ / 121
Suriname / US $ / 107
Swaziland / Rand / 411
Sweden / Sw Krona / 843
Switzerland / S Franc / 230
Syria / US $ / 98
Taiwan / New Taiwan $ / 3 628
Tajikistan / US $ / 117
Tanzania / US $ / 85
Thailand / Thai Baht / 3 050
Togo / Euro / 78
Tonga / Pa’anga / 174
Trinidad & Tobago / US $ / 213
Tunisia / Tunisian Dinar / 108
Turkey / US $ / 125
Turkmenistan / US $ / 125
Tuvalu / Aus $ / 339
Uganda / US $ / 78
Ukraine / Euro / 131
United Arab Emirates / Dirhams / 410
United Kingdom / B Pounds / 107
Uruguay / US $ / 91
USA / US $ / 157
Uzbekistan / US $ / 116
Vanuatu / US $ / 131
Venezuela / US $ / 117
Vietnam / US $ / 88
Yemen / US $ / 94
Zambia / US $ / 119
Zimbabwe / US $ / 264
Other countries not listed / US $ / 215
RETIREMENT LUMP SUM BENEFITS
Pre-retirement lump sums
Taxable lump sumR / Rate of tax
0 / - / 22 500 / 0%
22 501 / - / 600 000 / 18% of taxable income exceedingR 22 500
600 001 / - / 900 000 / R103 950 / + / 27%of taxable income exceedingR600 000
900 001 / - / R184 050 / + / 36%of taxable income exceedingR900 000
Retirement and death lump sums
Taxable lump sumR / Rate of tax
0 / - / 300 000 / 18%
300 001 / - / 600 000 / R54 000 / + / 27% of taxable income exceeding R300 000
600 001 / - / R135 000 / + / 36% of taxable income exceeding R600 000
Retirement fund lump sum withdrawal benefits consist of lump sums from a pension, pension preservation, provident, provident preservation or retirement annuity fund on withdrawal. Tax on a specific retirement fund lump sum withdrawal benefit (X) is equal to –
• tax determined by applying the tax table to the aggregate of that lump sum X plus all other retirement fund lump sum withdrawal benefits accruing from March 2009 and all retirement fund lump sum benefits accruing from October 2007; less
• tax determined by applying the tax table to the aggregate of all retirement fund lump sum withdrawal benefits accruing before lump sum X from March 2009 and all retirement fund lump sum benefits accruing from October 2007.
CORPORATE TAX RATES
Years of assessment ending between 1 April and 31 MarchNormal tax (basic rate)
/ 2010/11 / 2009/10Non-mining companies / 28% / 28%
Close corporations / 28% / 28%
Employment companies / 33% / 33%
Other companies / 28% / 28%
Taxable income of a non-resident company / 33% / 33%
Tax rates for qualifying small business corporations
Years of assessment ending between 1 April 2010 and 31 March 2011Taxable income
R / Rate of tax
0 / - / 57 000 / 0%
57 000 / - / 300 000 / 10% of the amount over R57 000
300 000 / - / R24 580 / + / 28% of the amount over R300000
Years of assessment ending between 1 April 2009 and 31 March 2010
Taxable income
R / Rate of tax
0 / - / 54 200 / 0%
54 201 / - / 300 000 / 10% of the amount over R54200
300 000 / - / R24 580 / + / 28% of the amount over R300000
Presumptive turnover tax on micro businesses
Years of assessment ending on 28 February 2010 and 2011Taxable Turnover
R / Rate of tax
0 / - / 100 000 / 0%
100 001 / - / 300 000 / 1% of the amount over R100 000
300 001 / - / 500 000 / R2 000 / + / 3% of the amount over R300 000
500 001 / - / 750 000 / R8 000 / + / 5% of the amount over R500 000
750 001 / - / R20 500 / + / 7% of the amount over R750 000
Secondary tax on companies (STC)
Rate of STC on dividends declared -17 March 1993 – 21 June 1994 / 15%
22 June 1994 – 13 March 1996 / 25%
14 March 1996 – 30 September 2007 / 12.5%
On or after 01 October 2007 / 10%
Trusts
The tax rate on trusts (other than special trusts) remains unchanged at 40%.
OTHER TAXES
Estate duty
Rate of estate duty on the dutiable amount of an estate -Death prior to 14 March 1996 / 15%
Death between 15 March 1996 and 30 September 2001 / 25%
Death or after 01 October 2001 / 20%
Primary abatement: R3 500 000 (2009: R3 500 000)
Donations tax
Payable at a flat rate on the value of property donated by a resident -Prior to 14 March 1996 / 15%
Between 15 March 1996 and 30 September 2007 / 25%
On or after 01 October 2007 / 20%
Annual exemption for natural persons: R100 000 (2009: R100 000)
Capital gains tax (CGT)
The effective CGT rates are as follows:
Taxpayer / InclusionRate (%) / Statutory
Rate (%) / Effective
Rate (%)
Individuals / 25 / 0 – 40 / 0 – 10
Trusts
Unit / - / 28 / -
Special / 25 / 18 – 40 / 4.5 – 10
Other / 50 / 40 / 20
Companies
Ordinary / 50 / 28 / 14
Small business corporation / 50 / 0 – 28 / 0 – 14
Employment company / 50 / 33 / 16.5
Foreign company / 50 / 33 / 16.5
Closely held passive investment companies / 50 / 40 / 20
Small companies subject to turnover tax / 0 / 0 / 0
Life assurers
Individual policyholders fund / 25 / 30 / 7.5
Company policyholders fund / 50 / 28 / 14
Untaxed policyholders fund / - / - / -
Corporate fund / 50 / 28 / 14
Transfer duty
Transfer duty rates remain unchanged.
Transfer duty rates for individuals 2009 and 2010Property value
R / Rate of tax
0 / - / 500 000 / 0%
500 001 / - / 1 000 000 / 5%
1 000 001 / - / Upwards / R25 000 / + / 8%
In all other cases the rate is 8% of the consideration.
Securities Transfer Tax
From 1 July 2008, STT replaced stamp duties and uncertificated securities tax on marketable securities. STT is levied at a flat rate of 0,25% on the taxable amount on any transfer of a security (listed and unlisted securities).
BUDGET COMMENTARY
(extracted from the SARS 2010/11 Budget Tax Proposals)
Introduction
The international financial crisis, and the recession that followed, required governments the world over to fund crucial stimulus measures at a time when tax revenues were falling sharply. In South Africa too, tax revenue has fallen as a share of GDP, contributing to a widening budget deficit.
Lower tax revenue is automatically taken into account in government’s countercyclical fiscal policy, which adjusts to highs and lows in the business cycle, supporting investment and demand. As the economy recovers, tax revenue will begin to recover, though there is often a considerable lag between an economic recovery and higher corporate tax receipts.
Tax policy will remain supportive of the overall economic recovery by providing relief to individuals to compensate for inflation. The 2010 tax proposals also include initiatives to improve tax compliance and broaden the tax base. In the future, higher tax revenue will be required to help narrow the fiscal deficit.
Overview
The past year has been one of the most challenging periods for revenue collection since 1994. From the fourth quarter of 2008, the economy contracted for three consecutive quarters. A significant slowdown in household consumption expenditure, falling employment, and declining imports and exports led to a steep cyclical reduction in tax revenue.
At the beginning of 2010 there are indications that the worst of the global recession is behind us. South Africa’s economy is on the way to recovery, with economic growth turning positive in the third quarter of 2009, and the trend is expected to continue during 2010/11.
The revised estimated tax revenue for 2009/10 is projected to be R68.9 billion lower than the budgeted R659.3 billion announced in February 2009, but R1.4 billion higher than the estimate at the time of the Medium Term Budget Policy Statement last October. In line with the economic slowdown, value-added tax (VAT) and customs duty revenues declined substantially in 2009/10, followed by corporate income tax revenues after a lag of two quarters. While both VAT and customs revenues may recover relatively quickly in response to renewed growth, corporate income tax is likely to trail behind.
The 2010 tax proposals provide individuals with relief for the effects of inflation. The taxation of financial instruments, certain aggressive financial transactions, and a comprehensive approach to taxing carbon emissions will be investigated during the course of 2010.
Main tax proposals
The main tax proposals include:
- Personal income tax relief for individuals amounting to R6.5 billion to compensate partially for inflation
- Discontinuation of the SITE system
- Measures to limit tax avoidance through salary structuring
- A limited voluntary disclosure dispensation for taxpayers in default
- Measures to curtail certain aggressive financial transactions
- An increase in fuel taxes
- Increases in excise duties on tobacco and alcohol products
- An amended carbon emissions tax on new motor vehicles.
Relief for individuals
Personal income tax relief
Over the past 10 years government has adjusted income tax brackets to take account of the effects of inflation on income tax paid by individuals. In addition, by adjusting thresholds, real relief has been provided to taxpayers, increasing disposable income and supporting economic growth.
Despite the tight fiscal environment, the 2010 Budget proposes direct tax relief to individuals amounting to R6.5 billion to partially compensate for the effects of inflation.
Most of the relief is provided to taxpayers in lower-income brackets. Taxpayers with an annual taxable income below R150 000 will receive 24.6 per cent of this relief; those with an annual taxable income between R150 001 and R250 000 will receive 28.8per cent; those with an annual taxable income between R250 001 and R500 000 will receive 26.2 per cent; and those with an annual taxable income above R500 000 will receive 20.4 per cent.