MJ Accountants’ Melissa Jacobs takes a closer look at how this year’s budget affects your finances.
Although there weren’t any major changes in tax rates, an additional R3 billion will be allocated towards SARS’ investment in technology, which is crucial in improving collections and closing the tax gap.
Corporate and Personal Tax
The National Treasury is aware that South Africa’s Corporate Income Tax (CIT) rate at 28% is relatively high when compared to similar countries, and that this acts as a hindrance to economic growth. A higher CIT rate creates an incentive for profit shifting to jurisdictions with lower tax rates, thereby affecting SARS’ efficiency in administering CIT and ultimately reducing overall revenue collections. Treasury has proposed that the CIT rate be lowered to 27% from April 2022.
Despite the impact of COVID-19 on revenue collection, the Minister of Finance announced that there will be an above-inflation 5% adjustment to the individual tax brackets and rebates. The net result is that, with effect from 1 March 2021, the maximum rate of 45% applies to taxable income in excess of R1 656 600 (up from R1 577 300) while the lowest rate of 18% applies to taxable income up to R216 200 (up from R205 900) – with similar adjustments to the brackets in between. There will also be an approximate 5% increase in the primary, secondary and tertiary rebates. The tax-free threshold has now increased from R83 100 to R87 300 for taxpayers under 65 years of age.
The medical tax credit available to taxpayers who are members of medical aid schemes will not be increased. They have however been increased from R319 to R332 per month for each of the first two dependents, and from R215 to R224 per month for every subsequent dependent.
Sin taxes: An increase of 8% in 2021/22 for tobacco product excise duties, and the alcohol industry excise duties are as follows: wine, beer and spirits are set at 11, 23 and 36 percent respectively.
An inflation-related increase of 15c/litre in the general fuel levy, and an increase of 11c/litre in the Road Accident Fund levy, with effect from 7 April 2021.
The Carbon Tax Rate increased from R127 per t/CO2e to R134 per t/CO2e from 1 January 2021, and aligned with the prescribed increase of CPI + 2%, in terms of Section 5 of the Carbon Tax Act.
An increase of 1c per litre has been included in the fuel levy price for both petrol and diesel to account for Carbon Tax. The price of petrol will increase by 8c/litre for petrol and 9c/litre for diesel with effect from 7 April 2021.
Plastic Bag Levy
A distinction will be drawn between fossil-based and biobased plastic bags. Fossil-based plastic bags will amount to 25c/bag, whereas bio-based plastic bags will be levied at 12.5c/bag.
Our offer to you – A complimentary tax and accounting health check to ensure all your affairs are up to date and fully compliant. To book your session email Melissa at email@example.com
“Melissa and her team at MJ Charted Accountants have been a huge support to our business! Outsourcing an accounting, tax and secretarial function is not an easy task, but MJ Charted Accountants have a dedicated, professional and friendly team who are always willing to go above and beyond to ensure our reporting deadlines and statutory requirements are achieved.”
– Blake Edy, Director, Frozen Brands
Tags: Budget and Speech Breakdown, finances, MJ Accountants, The Crest, The Crest 100th Issue, The Crest magazine