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