2014 Budget in a Nutshell


1.  INDIVIDUALS

The  maximum  marginal  rate  for  natural  persons  remains  at  40%  and  is  reached  when taxable income exceeds R673 100 (previously R638 600).

The  minimum  rate  of  tax  remains  at  18%  on  taxable  income  not  exceeding  R174  550 (previously R165 000).

The  primary  rebate  for  all  natural  persons  has  been  increased  to  R12  726  (previously R12 080).  The  additional  rebate  for  persons  aged  65  years  and  older  has  also  been increased  to  R7  110  (previously  R6  750).   Persons  aged  75  and  older  are  granted  a further R2 367 (previously R2 250).

The tax free portion of interest income  remains at  R23 800  for  taxpayers  under 65 years, and R34 500 for persons aged 65 years and older.

Local dividends remain subject to a flat 15% rate.

Foreign dividends are  taxed at a  flat  rate of 15%, but this may be reduced in terms of Double Tax Treaties.

Taxpayers  over  65  years  continue  to  be  exempt  from  the  payment  of  provisional  tax, provided their taxable income does not exceed R120 000 per annum and is derived solely from salary, interest, dividends and rental.

2.  COMPANIES AND CLOSE CORPORATIONS

The rate of normal tax remains at 28%.

A final withholding dividend tax at the flat rate of 15% on shareholders, remains in place.

Tax Exempt bodies (e.g. Retirement Funds) will suffer no withholding tax upon production of a tax exemption certificate.

3.  TRUSTS

The flat rate of 40% remains unchanged, although distributions in the same tax year are taxed instead in the beneficiaries hands. The tax regime governing trusts is under review.

4.  INDIVIDUAL TAX THRESHOLDS

Liability for tax commences as follows:

Under 65 years:    R  70 700  (previously R67 111)

65 to 74 years :    R110 200  (previously R104 611)

75 years and older:  R123 350  (previously R117 111)

INCOME TAX: INDIVIDUALS AND SPECIAL TRUSTS

Taxable income (R)     Rates of tax

0 – 174 550    18% of taxable income

174 551 – 272 700     R 31 419 +25% of taxable income above R174 550

272 701 – 377 450     R 55 957 +30% of taxable income above R272 700

377 451 – 528 000    R 87 382 +35% of taxable income above R377 450

528 001 – 673 100     R140 074 +38% of taxable income above R528 000

673 101 and above     R195 212 +40% of taxable income above R673 100

TRUSTS OTHER THAN SPECIAL TRUSTS – RATE OF TAX – 40%

TAX REBATES

PRIMARY          R12 726

SECONDARY (AGE 65 AND OVER)    R  7 110

PLUS AGE 75 AND OVER      R  2 367

5.  ESTATE DUTY AND DONATIONS TAX

The rate of estate duty and donations tax remains at 20%.

The estate duty abatement (exempt threshold) remains at R3,5 million per person and a surviving  spouse  may  also  benefit  automatically from  any  unused  deduction  in  the first dying spouse’s estate.   i.e. The abatement remains a combined maximum R7 million for the second dying spouse.

The  first  R100  000  of  property  donated  in  each  tax  year  by  a  natural  person  remains exempt from donations tax as do donations between spouses.

6.  CAPITAL GAINS TAX (CGT)

    The annual capital gain exclusion for individuals remains at R30 000.

    The primary residence exclusion from capital gains tax remains at R2 million.

    The capital gain exclusion at death remains at R300 000.

    The  effective  rate  of  CGT  is  the  range  of  6%  to  13,3%  for  individuals,  18,6%  for companies  and  26,7% for Trusts,  although  correctly  structured Trusts can  result  in the individual rate being applicable.

7.  TRANSFER DUTY

The  rates  remain,  i.e.  property  costing  less  than  R600 000  will  attract  no  duty.   A  3 percent rate applies between R600 000 and R1 million, 5 per cent between R1 million and R1,5 million and 8 percent thereafter.

8.  RETIREMENT FUNDS (effective 1 March 2014)

Retirement Fund Lump Sum Withdrawal Benefits

Taxable Income  Rates of Tax

0 – 25 000  0% of taxable income

25 001 – 660 000  18% of taxable income above 25 000

660 001 – 990 000  114 300 + 27% of taxable income above 660 000

990 001 and above  203 400 + 36% of taxable income above 990 000

Retirement Fund Lump Sum Retirement Benefits or Severance benefits

Taxable Income  Rates of Tax

0 – 500 000  0% of taxable income

500 001 – 700 000  18% of taxable income above 500 000

700 001 – 1 050 000  36 000 + 27% of taxable income above 700 000

1 050 001 and above  130 500 + 36% of taxable income above 1 050 000

Tax deductible limits on contributions remain as before.

Effective  1  March  2015,  Individual  taxpayer  deductions  will  be  set  at  27.5%  of  taxable income. Annual deductions will be limited to R350 000.  Non-deductible contributions (in excess of the thresholds) will be exempt from income tax if, on retirement, they are taken as either part of the lump sum or as annuity income.

9.  MEDICAL EXPENSES

•    Taxpayers  may  in  determining  tax  payable  deduct  monthly  contributions  to  medical schemes (a tax rebate to be known as a medical scheme fees tax credit) up to R257 for each of the taxpayer and the first dependant on the medical scheme and R172  for each additional dependant. When determining taxable income they can also claim a deduction for medical scheme contributions exceeding four times the amount of the medical  schemes  fees  tax  credits  and  any  other  medical  expenses  limited  to  the amount which exceeds 7.5% of taxable income.

•    An individual  who  is 65  and older, or if that person,  his or her spouse or child is a person with a disability, 33.3% of qualifying medical expenses paid and borne by the individual  and  an  amount  by  which  medical  scheme  contributions  paid  by  the individual exceed 3 times the medical scheme fees tax credits for the tax year.

•    Any other individual, 25% of an amount equal to qualifying medical expenses paid and borne by the individual and an amount by which medical scheme contributions paid by the individual exceed 4  times the medical scheme fees tax credits for   the tax  year, limited  to  the  amount  which  exceeds  7.5%  of  taxable  income  (excluding  retirement fund lump sums and severance benefits).

10.  VAT

The  rate  of  14%  remains  unchanged  and  the  compulsory  VAT  registration  threshold remains at R1 million

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