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HESSEQUA NEWS - 2022 Budget highlights:
• The employment tax incentive will be expanded through a 50?per?cent increase in the maximum monthly value to R1?500.?
• To provide some relief to households, no increases will be made to the general fuel levy on petrol and diesel for 2022/23.There will also be no increase in the Road Accident Fund levy.
• As announced in the 2021 Budget, the corporate income tax rate will be reduced from 28?per?cent to 27?per?cent, for companies with years of assessment ending on or after 31 March 2023.
• Government proposes to introduce a new tax on vaping products of at least R2.90 per millilitre from 1 January 2023. A new tax will also be introduced on beer powders.
• The carbon tax rate will increase from R134 to R144, effective from 1 January 2022.
• In terms of retirement funds, Regulation 28 of the Pension Funds Act sets out the criteria through which these funds may make investments. Changes have been proposed to these regulations to enable greater investment in infrastructure by these funds.
After consultation on these changes, the amendments will be gazetted next month.
INDIVIDUALS
Personal income tax rate and bracket structure
| 2022 | 2023 | ||
| Taxable Income (R) | Rates of Tax (R) | Taxable Income (R) | Rates of Tax (R) |
| R 1 – R 216 200 | 18% of each R1 | R 1 – R 226 000 | 18% of each R1 |
| R 216 201 – R 337 800 | R 38 916 + 26% of the amount above R 216 200 | R 226 001 – R 353 100 | R 40 680 + 26% of the amount above R 226 000 |
| R 337 801 – R 467 500 | R 70 532 + 31% of the amount above R 337 800 | R 353 101 – R 488 700 | R 73 726 + 31% of the amount above R 353 100 |
| R 467 501 – R 613 600 | R 110 739 + 36% of the amount above R 467 500 | R 488 701 – R 641 400 | R 115 762 + 36% of the amount above R 488 700 |
| R 613 601 – R 782 200 | R 163 335 + 39% of the amount above R 613 600 | R 641 401 – R 817 600 | R 170 734 + 39% of the amount above R 641 400 |
| R 782 201 – R1 656 600 | R 229 089 + 41% of the amount above R 782 200 | R 817 601 – R 1 731 600 | R 239 452+ 41% of the amount above R 817 600 |
| R1 656 601 and above | R 587 593 + 45% of the amount above R 1 656 600 | R1 731 601 and above | R 614 192 + 45% of the amount above R 1 731 600 |
2022 Rebates 2023 Rebates
Primary rebate R 15 714 Primary rebate R 16 425
Secondary rebate R 8 613 Secondary rebate R 9 000
Tertiary rebate R 2 871 Tertiary rebate R 2 997
Tax thresholds Tax thresholds
Under 65 years R 87 300 Under 65 years R 91 250
65 years and older R 135 150 65 years and older R 141 250
75 years and older R 151 100 75 years and older R 157 900
Interest exemption Interest exemption
Under 65 years R 23 800 Under 65 years R 23 800
65 years and older R 34 500 65 years and older R 34 500
Travel allowances
No deduction may be claimed if no logbook is kept. 80% of the taxpayer’s travel allowance must be included in the employee’s remuneration to calculate the monthly PAYE.
Value of vehicle Fixed cost Fuel Maintenance
R (R p.a.) (c/km) (c/km)
0 – 95 000 31 332 105.8 37.4
95 001 – 190 000 55 894 118.1 46.8
190 001 – 285 000 80 539 128.3 51.6
285 001 – 380 000 102 211 138.0 56.4
380 001 – 475 000 123 955 147.7 66.2
475 001 – 570 000 146 753 169.4 77.8
570 001 – 665 000 169 552 175.1 96.6
More than 665 000 169 552 175.1 96.6
2021/2022 2022/2023
Alternative deemed cost per km (subject to certain conditions) 382 c/km 382 c/km
The deemed cost per km is subject to change upon a possible update from national treasury.
Use of company car
The % included in an employee’s taxable income remains at 3.5% of the determined value of the vehicle. Where the vehicle is subject to a maintenance plan, at the time the employer acquired the vehicle, the taxable value is 3.25% of the determined value.
80% of the fringe benefit must be included in the employee’s remuneration for purposes of calculating PAYE. The percentage is reduced to 20% if the employer is satisfied that at least 80% of the use of motor vehicle for the tax year will be for business purposes.
On assessment the fringe benefit for the tax year is reduced by the ratio of distance travelled for business purposes substantiated by a logbook divided by the actual distance travelled during the tax year.
On assessment further relief is available for the cost of license, insurance, maintenance, and fuel for private travel if the full cost thereof has been borne by the employee and if the distance travelled for private purposes is substantiated by a logbook.
Retirement fund contributions
Amounts contributed to pension, provident and retirement annuity funds during a year of assessment are limited to 27.5% of the greater of remuneration for PAYE purposes or taxable income (both excluding retirement lump sums and severance benefits). The deduction is further limited to a maximum of R350 000.
Tax-free savings accounts
The annual limit on contributions to tax-free savings accounts will remain at R36 000
Medical expenses
In determining tax payable, individuals are allowed to deduct:
Monthly contributions to medical schemes (a tax rebate referred to as a medical scheme fees tax credit) up to R347 for the individual who paid the contributions and the first dependent on the medical scheme and R234 for each additional dependent; and in the case of:
Taxpayers 65 and older, or if that person, his or her spouse or child is born 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; or
Any other taxpayer, 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 that tax year, limited to the amount which exceeds 7.5% of taxable income (excluding retirement fund lump sums and severance benefits).
Retirement fund lump sum benefits or severance benefits
2022
1 – 500 000 0% of taxable income
500 001 – 700 000 18% of each R above R 500 000
700 001 – 1 050 000 36 000 + 27% of each R above R 700 000
1 050 001 and more 130 500 + 36% of each R above R 1 050 000
2023
1 – 500 000 0% of taxable income
500 001 – 700 000 18% of each R above R 500 000
700 001 – 1 050 000 36 000 + 27% of each R above R 700 000
1 050 001 and more 130 500 + 36% of each R above R 1 050 000
Retirement fund lump sum withdrawal benefits
2022
1 – 25 000 0% of taxable income
25 001 – 660 000 18% of each R above R 25 000
660 001 – 990 000 R114 300 + 27% of each R above R 660 000
990 001 and more R203 400 + 36% of each R above R 990 000
2023
1 – 25 000 0% of taxable income
25 001 – 660 000 18% of each R above R 25 000
660 001 – 990 000 R114 300 + 27% of each R above R 660 000
990 001 and more R203 400 + 36% of each R above R 990 000
COMPANIES
Company tax rates
2021/2022 2022/2023
Normal income tax 28% 27%
Employment company 28% 27%
SA branches of foreign companies 28% 27%
Dividends tax 20% 20%
Small business corporations
The tax tables are as follows:
2021/2022
1 – R 87 300 - 0% of taxable income
R 87 301 – R365 000 - 7% of taxable income above R 87 300
R 365 001 – R 550 000 - 19 439 + 21% of taxable income above R 365 000
R 550 001 and above - 58 289 + 28% of taxable income above R 550 000
2022/2023
Financial years ending on any date between 1 April 2021 and 30 March 2023:
1 – R 91 250 - 0% of taxable income
R 91 251 – R365 000 - 7% of taxable income above R 91 250
R 365 001 – R 550 000 - 19 163 + 21% of taxable income above R 365 000
R 550 001 and above - 58 013 + 28% of taxable income above R 550 000
Years of assessment ending on or after 31 March 2023:
1 – R 91 250 - 0% of taxable income
R 91 251 – R365 000 - 7% of taxable income above R 91 250
R 365 001 – R 550 000 - 19 163 + 21% of taxable income above R 365 000
R 550 001 and above - 58 013 + 27% of taxable income above R 550 00
Micro businesses
2022
Turnover Tax liability
1 – 335 000 0% 335 001 – 500 000 1% of each R above R335 000 500 001 – 750 000 1 650 + 2% of each R above R 500 000
750 001 – 1000 000 6 650 + 3% of each R above R 750 000
2023
Turnover Tax liability
1 – 335 000 0% 335 001 – 500 000 1% of each R above R335 000 500 001 – 750 000 1 650 + 2% of each R above R 500 000 750 001 – 1000 000 6 650 + 3% of each R above R 750 000
VAT
VAT is levied at the standard rate of 15% on the supply of goods and services by registered vendors.
A vendor making taxable supplies of more than R1 million per annum must register for VAT.
A vendor making taxable supplies of more than R50 000 but not more than R1 million per annum may apply for voluntary registration.
DONATIONS TAX
The annual donations tax exemption for natural persons remains unchanged at R100 000 and the rate also remains 20%.
If the donations exceed R30 million, the rate of donations tax will change to 25%.
CAPITAL GAINS TAX
Maximum effective rate of tax:
Individuals and special trusts 18.00%
Companies 22.40% (will reduce to 21.6%)
Other trusts 36.00%
The exclusion threshold for capital gains and losses for individuals and special trusts remains at R 40 000.
The annual exclusion for individuals in the year of death remains at R300 000. The primary residence exclusion for individuals is R 2 million.
The capital gains exclusion on disposal of a small business when a person is at least 55 years old, will remain at R1 800 000 when the market value of the active business assets does not exceed R 10 000 000.
DIVIDENDS TAX
Dividends received by individuals from South African companies are taxed at a rate of 20% which is withheld by the entities paying the dividends to the individuals.
TRANSFER DUTY
Transfer duty rates remained the same for the 2023 tax year at the following rates:
Property value Rate
1 – 1 000 000 0%
1 000 001 – 1 375 000 3% of each R above R 1 000 000
1 375 001 – 1 925 000 11 250 + 6% of each R above R1 375 000
1 925 001 – 2 475 000 44 250 + 8% of each R above R1 925 000
2 475 001 – 11 000 000 88 250 + 11% of each R above R2 475 000
11 000 001 and above 1 026 000 + 13% of each R above R11 000 000
ESTATE DUTY
Estate duty is levied at a rate of 20% on the first R30 million and at a rate of 25% above R30 million on property of residents and South African property of non-residents.
A basic deduction of R 3.5 million is allowed in the determination of an estate’s liability for estate duty as well as deductions for liabilities, bequests to public benefit organizations and property accruing to surviving spouses.
SECURITIES TRANSFER TAX
Tax is imposed at a rate of 0.25 of a per cent on the transfer of listed or unlisted securities. Securities consist of shares in companies or member’s interest in close corporations.
DISCLAIMER
BVSA accepts no liability whatsoever for any losses, damage or cost incurred which may arise from information published in this document. Please contact anyone of the directors of BVSA before any decisions are made regarding information published.
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