Freshly unpacked: Budget 2020!
by Amanda Roothman on 26 February 2020
As we all know, Finance Minister Tito Mboweni presented the 2020 Budget today.
- No VAT increase – this stays unchanged at the current rate of 15% - Quite a surprise!
- No income tax increase –
Companies rate stays unchanged at 28%.
Treasury is looking into a future cut in corporate income tax rate, funded by broadening the corporate income tax base; and
Individuals tax rate were unexpectedly relieved (the adjustment being more than inflation) This relief, amounting to around R2bn will be funded through…
- Carbon tax (around R 1.75bn; this means a 5.6% increase – from R120 to R127 per ton of carbon dioxide) and
- Plastic bag levy (increased to 25c).
- Expat tax: the exemption cap for foreign remuneration earned by SA Tax Residents, will increase to R1.25million as from 1 March 2020.
- Medical aid tax credits – increase from R310 to R319 per month for the first 2 dependents, and from R209 to R215 per month for the rest of the dependents on the medical aid fund. This is also a surprise, based on the prior year’s unchanged relief.
- Modest raise in fuel levy – 25c per litre.
- Usual sin tax increase:
Liquor and tobacco – increase from 4.4% to 7.5% and
NEW! Electronic cigarettes (vapes) – to be taxed at 75% of the cigarette excise rate with immediate effect.
- Annual contribution to tax-free savings – increased to R 36 000 (R3 000 increase)
- TOP TIP: Remember to increase those monthly debit orders from R 2 750 to R 3 000.
- R160bn drop in salaries for national and provincial administrations, and other public bodies, will account for at least 1% of the GDP for the next 3 years. This will be offset by:
- R111bn increase in allocations for ailing state-owned enterprises (mostly Escom and SAA)
- For the 2020-2021 tax year, Treasury expects economy to expand by 0.9% (accelerating to 1.6% in 2022) to make a dent in unemployment rate.
- Edward Kieswetter (SARS): “We have low hanging fruit to pursue” related to strengthening the authority and improving compliance rather than changing tax rates to boost takings.
- Reduction of allocations to human settlements, health and educations infrastructure.
“Less than two years before winning the World Cup, the Springboks lost 57-0 to the All Blacks. Miss Universe did not win her first attempt at Miss South Africa. Winning takes patience, prudence and perseverance. As Saint Paul tells us, ‘We must run in such a way that we may win’.” – Tito Mboweni – 26 February 2020.
by Amanda Roothman on 23 May