Big relief for taxpayers – the new tax tables have catered for about a 5% relief across all bands so thankfully we will all save a little. Those in the bottom few bands of the earnings table will save more, percentage-wise, than those at the top, which has been the trend for many years.
The budget speech made no mention of increased rates for the Prescribed Travel Rate per km, nor did it provide details of the Travel Table for the 2021/2022 year, items which generally get increased from March each year. The authorities are busy reviewing these rates together with the Subsistence Allowance rates for the year, all of which should be clarified over the next few weeks.
Medical Tax Credits saw a welcomed increase of around 4.5%. The credit for the main member and first dependent has increased to R 332.00 whilst the credit for all other dependents has increased to R 224.00. Albeit that this a small increase, it still is very welcome as we start coming out of the worst of the COVID-19 pandemic, which has left a trail of financial destruction for so many taxpayers.
Blow for those taxpayers planning to emigrate. When emigrating taxpayers usually have to scrape together everything they have to get themselves settled in their new country. Having access to the money in their retirement fund plays a big part in this and without these funds, many taxpayers will struggle to find their feet. In the past taxpayers had access to these funds very soon after the financial emigration process was completed, but the recent change in the tax laws will now result in them only having access to these funds after being out of SA for an unbroken period of 3 years.
Corporate tax rate coming down. Good news for companies, or is it? With the possible introduction of a reduced corporate tax rate down to 27%, it does however come with some potential limitations around the carrying forward of certain accessed losses, and some interesting conditions under which interest paid won’t be allowed as a deduction. On the face of it sounds like it’s going to be more beneficial to keep things as they are !. The authorities have some time to think about this so let’s trust that sanity will prevail on this one.