Budget 2011/2012

1. Budget 2011/2012

2. Budget 2011/12

3. Budget 2011/12

4. Budget 2011/12 • Pravin Gordhan quotes: • “We at SARS should try to be creative and to demonstrate goodwill. But out there, you will always have those who are being deliberately evasive. And honest taxpayers will want us to create a level playing field.” • This is probably due to companies paying out lower bonuses and lower than estimated wage increases.”

5. Budget 2011/12 • Main tax proposals: • Personal income tax relief of R8.1billion • 3rd rebate for individuals >75 years • Conversion of medical tax deduction to tax credits • Transfer duty relief • Higher taxes on fuel • Higher taxes on alcohol and tobacco • Taxation of gambling winnings.

6. Budget 2011/12 Where does tax revenue come from?

7. Budget 2011/12

8. Budget 2011/12

9. Budget 2011/12 Personal income tax

10. Budget 2011/12 • Personal tax relief: • 50% to taxpayers with an income < R270 000 p.a. • 33% to taxpayers between R 270 000 – R 580 000 • 12% to taxpayers between R 580 000 – R 1 000 000 • 5% to accounting officers • Otherwise known as taxpayers above one million rand taxable income

11. Budget 2011/12 • Tax brackets • 0 – 150 000 18% • 150 001 – 235 000 R 27 000 + 25% • 235 001 – 325 000 R 48 250 + 30% • 325 001 – 455 000 R 75 250 + 35% • 455 001 – 580 000 R120 750 + 38% • >580 001 R168 250 + 40%

12. Budget 2011/12 • Rebates: • Primary R 10 755 • Secondary R 6 012 • Third rebate R 2 000 • Tax Thresholds: • <65 R 59 750 • >65 R 93 150 • >75 R104 261

13. Budget 2011/12 • Tax savings: • Younger than 65 • R 120 000 p.a. R 495 • R 200 000 p.a. R 1 195 • R 300 000 p.a. R 1 895 • R 400 000 p.a. R 2 895 • R 500 000 p.a. R 3 615 • R 750 000 p.a. R 4 175

14. Budget 2011/12 • Tax savings: • Older than 65 and younger than 75 • R 90 000 p.a. R 265 • R 120 000 p.a. R 832 • R 200 000 p.a. R 1 532 • R 300 000 p.a. R 2 232 • R 400 000 p.a. R 3 232 • R 500 000 p.a. R 3 952 • R 750 000 p.a. R 4 512

15. Budget 2011/12 • Tax savings: • Older than 75 • R 100 000 p.a. R 2 065 • R 120 000 p.a. R 2 832 • R 150 000 p.a. R 3 532 • R 250 000 p.a. R 4 232 • R 400 000 p.a. R 5 232 • R 500 000 p.a. R 5 952 • R 750 000 p.a. R 6 512

16. Budget 2011/12 • Savings • Interest exemptions: • Below 65 R 22 800 (2011 R 22 300) • Over 65 R 33 000 (2011 R 32 000) • Foreign R 3 700

17. Budget 2011/12 • Savings • Incentivised savings schemes: • Housing (1st time buyers) • Higher education

18. Budget 2011/12 • Retirement • 2011/12 • Pension funds: • Greater of 7.5% from RFI or R1 750 • Arrear contributions – R 1 800 • Retirement annuity • Greater of.. • 15% of non-RFI • R 1750 • R3 500 less current pension fund deductions • Broaden list of service providers to include: • National Treasury’s retail savings bond scheme • Collective investment schemes

19. Budget 2011/12 • Retirement “For every benefit you receive a tax is levied” Ralph Waldo Emerson 1803-1882

20. Budget 2011/12 • Retirement • 2012/13 • Pension funds • Employer’s contribution – taxable fringe benefit • 22.5% of taxable income deductible (RA, Pension and provident funds) • Minimum deduction R12 000 • Maximum deduction R200 000 • Provident funds • Limit withdrawals to one-third

21. Budget 2011/12 • Retirement • Lump sum benefits - Retirement • 0 - 315 000 0% • 315 001 – 630 000 18% of amount above R315 000 • 630 001 – 945 000 R56 700 plus 27% of amount above R630 000 • 945 001 and above R141 750 plus 36% of amount above R945 000

22. Budget 2011/12 • Retirement • Lump sum benefits - Withdrawal • 0 - 22 500 0% • 22 501 – 600 000 18% of amount above R22 500 • 600 001 – 900 000 R103 950 + 27% of amount above R600 000 • 900 001 and above R184 950 plus 36% of amount above R900 000

23. Budget 2011/12 • Medical deductions • Contributions to medical schemes and qualifying out-of-pocket medical expenses • R 720 for the first two beneficiaries each • R 440 for each additional beneficiary • Amount above 7.5% of taxable income • Non refundable tax credits from 1 March 2012 • Relative relief does not increase as the marginal tax rate of the individual increase • Discussion document by end of March 2011

24. Budget 2011/12 • National health insurance • Phased in over 14 years • Subsidised by: • Payroll tax • VAT • Personal income tax surcharge • Co-payments and user charges

25. Budget 2011/12 • Fringe benefits – Company cars • 3.5% per month on the value (cost incl VAT) • 3.25% per month on the value (cost incl VAT) if the vehicle has a maintenance plan • 80% of fringe benefit to be included in remuneration • Percentage is reduced to 20% if employer is satisfied that at least 80% of use are for business purposes • Fringe benefit reduced on assessment if log book kept and submitted • Further relief on assessment if employee has borne cost of licence, insurance, maintenance and fuel for private travel (subject to logbook)

26. Budget 2011/12 • General: • Consistent tax treatment of all forms of income from capital (interest, dividends, capital gains) to be considered • CG exclusions increased: • Annual R 20 000 • Death R 200 000 • SBC disposal R 900 000 • Capital gains on forex (for individuals) to be removed • Withholding tax of 15% on gambling winnings above R25 000 from 1 April 2012 (including National Lottery) • Cross border withholding tax on interest – 10%

27. Budget 2011/12 Corporate tax

28. Budget 2011/12 • Corporate tax rates • Ltd, Pty (Ltd) & CC 28% • Personal Service Companies 33% • Foreign resident companies 33%

29. Budget 2011/12 • Small Business Corporation • 0 – 59 750 0% • 59 751 – 300 000 10% of amount above R59 750 • 300 001 and above R24 025 + 28% of the amount above R300 000

30. Budget 2011/12 • Micro Businesses • Taxable turnover • 0 – 150 000 0% • 150 001 - 300 000 1% of amount above R150 000 • 300 001 – 500 000 R1 500 + 3% of the amount above R300 000 • 500 001 – 750 000 R7 500 + 5% of the amount above R500 000 • 750 000 and aboveR20 000 + 7% of the amount above R750 000

31. Budget 2011/12 • Micro Businesses • Register for VAT from 1 March 2012 • 3 year bar on voluntary deregistration to be lifted • SARS empowered to register unregistered micro businesses • Only 7 700 businesses have registered • 88% was registered previously

32. Budget 2011/12 • Other taxes and duties • VAT 14% • Securities transfer tax 0.25% • Transfer duties (Individuals): • 0 – 600 000 0% • 600 001 – 1 000 000 3% of value above R600 000 • 1 000 001 – 1 500 000 R12 000 + 5% of value above R1 000 000 • 1 500 001 and above R37 000 + 8% of the value above R1 500 000

33. Budget 2011/12 • Other taxes and duties • Notional input VAT on fixed property: • Delinked from transfer duty • Lower of • Selling price • Open-market value • Current municipal value • VAT-inclusive acquisition price

34. Budget 2011/12 • Other taxes and duties • STC 10% • Dividends tax 1 April 2012

35. Budget 2011/12 • Other taxes and duties • Fuel taxes 93 Octane Petrol Diesel General fuel levy 177.50 162.50 RAF Levy 80.00 80.00 Customs 4.00 4.00 Total 261.50 246.51 Percentage of pump price 29.6% 30.3%

36. Budget 2011/12 • Tax administration • Voluntary disclosure program will remain open until 31 October 2011 • Customs – systems modernisation • Audit – SARS to use data provided by credit bureaus to build tax payer profile and identify non compliance

37. Budget 2011/12 • Tax policy research projects • Taxation of financial derivatives • Taxation of long-term insurers • Housing tax incentive (< R300 000) for developers • Provincial motor vehicle licence fees • Estate duty • VAT and education accommodation • VAT on treatment of public passenger transport services

38. Budget 2011/12 • Finally…. “The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing” Jean Baptiste Colbert (Minister of Finance under King Louis XIV of France. 1619 – 1683)