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How far over did we go in 2008?

How far over did we go in 2008?. 2008 2008 Over/ Budget Actual Under Rm Rm Rm Individuals 155,335 168 500 13 165 Corporate 138,515 141 400 2 855 STC 16,000 20 200 4 200 RFT 0 160 160 SETA levies 6,500 6 800 300 Donations tax & Estate duty 480 780 300

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How far over did we go in 2008?

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  1. How far over did we go in 2008? 2008 2008 Over/ Budget Actual Under Rm Rm Rm • Individuals 155,335 168 500 13 165 • Corporate 138,515 141 400 2 855 • STC 16,000 20 200 4 200 • RFT 0 160 160 • SETA levies 6,500 6 800 300 • Donations tax & Estate duty 480 780 300 • Transfer duty & MST 10,515 11,900 1,385 • VAT 155,068 147 000 -8,068 • Customs and excise 48289 47 612 -677 • Fuel 22,937 24 000 1,063 • Other 2,923 2,711 -212 556,562 571,063 14,501

  2. Million $ question: “..and how far do we have to go in 2009”

  3. And how did we spend it?

  4. And going forward to 2009

  5. TRUSTS, PRIVATE COMPANIES AND CLOSED CORPORATIONS

  6. Drop from 30% To 29% 2006 Company Trust Individual Capital Revenue Capital Revenue Capital Revenue Rm Rm Rm Rm Rm Rm Pre-tax earnings 100 100 100 100 100 100 Inclusion rate 50% 100% 50% 100% 25% 100% Taxable Income 50 100 50 100 25 100 Tax rate 29% 29% 40% 40% 40% 40% Income tax 14.5 29.0 20.0 40.0 10.0 40.0

  7. Hold it RSC Levies repealed Cost R7 billion 2007 Company Trust Individual Capital Revenue Capital Revenue Capital Revenue Rm Rm Rm Rm Rm Rm Pre-tax earnings 100 100 100 100 100 100 Inclusion rate 50% 100% 50% 100% 25% 100% Taxable Income 50 100 50 100 25 100 Tax rate 29% 29% 40% 40% 40% 40% Income tax 14.5 29.0 20.0 40.0 10.0 40.0

  8. 2007 STC stays at 12,5% until 30/9 2008 Company Trust Individual Capital Revenue Capital Revenue Capital Revenue Rm Rm Rm Rm Rm Rm Pre-tax earnings 100 100 100 100 100 100 Inclusion rate 50% 100% 50% 100% 25% 100% Taxable Income 50 100 50 100 25 100 Tax rate 29% 29% 40% 40% 40% 40% Income tax 14.5 29.0 20.0 40.0 10.0 40.0 After Tax 85.5 71.0 80.0 60.0 90.0 60.0 STC (9.5) (7.9) - - - - After all taxes 76.0 63.1 80.0 60.0 90.0 60.0 Previously 24.4% 37.8% 20 % 40% 10% 40% Effective tax rate 24% 36.9% 20% 40% 10% 40% Phase 1 Dividend tax at 10% From 1 October 2007 R3 billion Phase 2 Dividend tax On shareholder From 2008

  9. 2009 Drop to 28% 2009 Company Trust Individual Capital Revenue Capital Revenue Capital Revenue Rm Rm Rm Rm Rm Rm Pre-tax earnings 100 100 100 100 100 100 Inclusion rate 50% 100% 50% 100% 25% 100% Taxable Income 50 100 50 100 25 100 Tax rate 28% 29% 40% 40% 40% 40% Income tax 14 28.0 20.0 40.0 10.0 40.0 After Tax 86.0 72.0 80.0 60.0 90.0 60.0 STC (8.6) (7.2) - - - - After all taxes 77.4 64.8 80.0 60.0 90.0 60.0 Previously 24.4% 37.8% 20 % 40% 10% 40% Effective tax rate 22.6% 35.2% 20% 40% 10% 40%

  10. New Developments – Business executives need to consult on these issues • Dividends en specie • Redemptions from share premium • Capital distributions and CGT • Distribution of pre 1993 Revenue Reserves • Distribution of pre 2001 Capital Reserves • Payment of royalties and licensing fees • New commercial building allowance

  11. Small Business Corporations 2006 2007 2008 2009 15% - - - - 0% 35,000 40,000 40,000 40,000 10% 35,000 - 40,000 - 43,000 - 45,000 - 250,000 300,000 300,000 300,000 29/30% >250,000 >300,000 >300,000 >300,000

  12. Very small business presumptive tax Annual Income Bracket Basic LEVY • 0 - 100,000 - 0% • 100,001 - 300,000 R 0 2% • 300,001 - 500,000 R 4,000 +4% • 500 001 - 750,000 R 12,000 +5.5% • 750 001 - 1 000,000 R 25 750 7.5% • No VAT registration required

  13. Venture Capital Incentive - General • Targeted • – High growth and High Tech • - Turnover up to R14 million, Gross Assets up to R7 million • 30% up front deduction • Cap individuals – R500 000 • Cap Companies – R750 000 • Cap venture Capital – R7 500 000

  14. Venture Capital Incentive – Junior mining exploration • Targeted • – High growth and High Tech • - Turnover up to R14 million, Gross Assets up to R7 million • 50% up front deduction • Cap individuals – R1 000 000 • Cap Companies – R10 000 000 • Cap venture Capital – R10 000 00

  15. Electricity levy • 2 cents per kilowatt hour • R2 billion for 2008/9 • R4 billion thereafter

  16. 2007 Tax Tables Annual Income Bracket Basic Marginal • 0 - 100,000 - 18% • 100,001 - 160,000 R 18,000 25% • 160,001 - 220,000 R 33,000 30% • 220,001 - 300,000 R 51,000 35% • 300,001 - 400,000 R 79,000 38% • 400,001 - R 117,000 40% Primary rebate - R 7,200 Over 65 rebate - R 4,500 Threshold - under 65 - R 40,000 over 65 - R 65,000 Total Cost R12 Billion

  17. It’s worth more than a case of French champagne?2007 Tax year Taxable income 2006 2007 Saving Under 65 R R R 50,000 2,700 1,800 900 100,000 13,100 10,800 2,300 250,000 60,700 54,300 6,400 500,000 159,700 149,800 9,900 1,000,000 359,700 349,800 9,900

  18. 2008 Tax Tables Annual Income Bracket Basic Marginal • 0 - 112,500 - 18% • 100,001 - 180,000 R 20,250 25% • 180,001 - 250,000 R 37,125 30% • 250,001 - 350,000 R 58,125 35% • 350,001 - 450,000 R 93,125 38% • 450,001 - R 131,125 40% Primary rebate - R 7,740 Over 65 rebate - R 4,680 Threshold - under 65 - R 43,000 over 65 - R 69,000 Total Cost R8,4 Billion

  19. It’s worth more than a case of French champagne? 2008 Tax year Taxable income 2007 2008 Saving Under 65 R R R 50,000 1,800 1,260 540 100,000 10,800 10, 260 540 250,000 54,300 50, 385 3,915 500,000 149,800 143,385 6,415 1,000,000 349,800 343,385 6,415

  20. 2009 Tax Tables Annual Income Bracket Basic Marginal • 0 - 112,500 - 18% • 100,001 - 180,000 R 20,250 25% • 180,001 - 250,000 R 37,125 30% • 250,001 - 350,000 R 58,125 35% • 350,001 - 450,000 R 93,125 38% • 450,001 - R 131,125 40% Primary rebate - R 7,740 Over 65 rebate - R 4,680 Threshold - under 65 - R 43,000 over 65 - R 69,000 Up to R122 000 Bracket adjustments Hold at 40% Up to R490 000 Up to R8 280 Hold at R5 040 Up to R46 000 Up to R74 000

  21. 2009 Tax Tables Annual Income Bracket Basic Marginal • 0 - R122 000 R - 18% • R122 001 -R195 000 R21 960 25% • R195 001 -R270 000 R40 210 30% • R270 001 -R380 000 R62 710 35% • R380 001 -R490 000 R101 210 38% • R490 001 + R143 010 40% Primary rebate - R 8 280 Over 65 rebate - R 5 040 Threshold - under 65 - R 46 000 over 65 - R 74 000 Total Cost R7.2 Billion

  22. It’s worth more than a case of French champagne? 2009 Tax year Taxable income 2008 2009 Saving Under 65 R R R 50,000 1,260 720 540 100,000 10,260 9 720 540 250,000 50,385 48 430 1 955 500,000 143,385 138 730 4 655 1,000,000 343,385 338 730 4 655

  23. 2009 Retirement Lump sum Tax Tables Annual Income Bracket Basic Marginal • 0 - R300 000 R - 0 % • R300 001 -R600 000 R0 + 18% • R600 001 -R900 000 R54 000 27% • R900 001 + R135 000 35% Primary rebate - R 8 280 Over 65 rebate - R 5 040 Threshold - under 65 - R 46 000 over 65 - R 74 000 Total Cost R7.2 Billion

  24. More Incentives to save - 2009 • Interest exemption 2007 (under 65) – R16 500 • Interest exemption 2008 (under 65) – R18,000 • Interest exemption 2009 (under 65) – R19,000) • Interest exemption 2007 (over 65 – R24,500) • Interest deduction 2008 (over 65 – R26,000) • Interest deduction 2008 (over 65 – R27,000)

  25. Tax threshold – 2009 (basic plus interest) • 2007 under 65 – R40,000+R16 500 = R56,500 • 2008 under 65 – R43,000+R18,000 = R61,000 • 2009 under 65 – R46,000+R19,000 = R65,000 • 2007 over 65 – R65,000+R24,500 = R89,500 • 2008 over 65 – R69,000+ R26,000 = R95,000 • 2009 over 65 – R74,000+ R27,500 = R101,500

  26. And Employer tax free medical aid subs are increased • Member plus 1st dependant - 2007 - R500 • Each additional dependant - 2007 - R300 • Member plus 1st dependant - 2008 - R530 • Each additional dependant - 2008 - R320 • Member plus 1st dependant - 2009 - R570 • Each additional dependant - 2009 - R345

  27. And Employer tax free medical aid subs are increased

  28. Plus • Travel allowances to be updated • Top Limit – R400 000 • Fixed costs – R116 012 per annum • Maintenance – R0.75.2 per kilometer • Fuel – R1,103 per kilometer • Work in example on R400 000 plus car at 32 000 kilometers

  29. Plus • Bursaries for relatives of employees • Up to R10 000 (R3 000)per annum. • On employees earning less than R100 000 (R60 000) per annum

  30. Plus • Provide SITE refunds for temporary employees

  31. Is this capital fiscal drag? 2007 2008 2009 • Donations tax exemption 50,000 100,000 100,000 • Casual donations ?,000 10,000 10,000 • Estate duty threshold 2,5m 3,5m 3,5m • CGT annual exemption 12,500 15,000 16,000 • CGT death exemption 60,000 120 000 120,000 • CGT primary residence exemption 1,5m 1,5m 1,5m

  32. Transfer Duty – 2006/7 0% on 500 000 5% on 500 001 to 1 000 000 8% on 1 000 001 plus

  33. Transfer Duty 2007/8 0% on 500 000 5% on 500 001 to 1 000 000 8% on 1 000 001 plus

  34. Transfer Duty – 2008/9 0% on 500 000 5% on 500 001 to 1 000 000 8% on 1 000 001 plus

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