Yesterday, the Minister of Finance Mr. Enoch Godongwana
tabled his maiden Budget speech. Minister Godongwana proposed no significant
tax hikes to personal income taxes along with maintaining the current VAT rate
for the 2022/2023 tax year.
The Minister highlighted South Africa’s continued commitment
to proceed with fiscal discipline, however, South African taxpayers will have
to see whether the proposed changes to Government expenditure can be
implemented.
Key changes in
the Budget?
Tax relief for individual taxpayers with
personal tax rates and rebates adjusted upwards by 4.5% in line with expected
inflation.
Corporate tax rate to decline to 27% effective
for years of assessment ending on or after 31st March 2023.
Offshore investment limits in retirement savings
set to increase from 30% to 45%
Increase in excise duties, but no additional
increases to the fuel tax levy or the Road Accident Fund
Chief Economist for Stanlib, Kevin Lings, described the Budget as a cautious Budget with the Minister largely delivering a Budget that was in line with market expectations.
Investors are reminded that the end of the tax year is almost upon us. Investors can reduce their taxable income by contributing to a retirement annuity. Should you wish to reduce your tax liability please contact the office soonest to ensure that your contributions are deductible for this financial tax year.
“Government’s view of the economy could be summed up in a few short phrases; If it moves, tax it. If it keeps moving, regulate it. And if it stops moving subsidize it.” Ronald Reagan
Finance Minister, Mr. Tito Mboweni, on Wednesday, announced South Africa’s Budget for the fiscal year 2020/2021. The budget set against the backdrop of the fallout from the global pandemic highlighted once again the many challenges facing ordinary South African citizens.
What were the key changes
in the Budget?
An above-inflation increase of 5% in the personal income tax brackets and rebates
Corporate income tax rates reduced to 27%
Excise duties on alcohol and tobacco increased by 8%
Increase of 4% for medical tax credits
To read more about the 2021 Budget please click
on the link to read Allan Gray’s Budget Speech Update. Alternatively, you can
listen to STANLIB’s Chief Economist, Kevin Lings as he unpacks the economic
analysis of the Budget 2021.
Office
re-opening
As from the 1st of March we will be re-opening our offices. We have adapted our offices to ensure that all necessary safety protocols are adhered to. Clients who would like to make an appointment or pop in for a coffee are more than welcome and we look forward to welcoming you back!
” The climb is tough, but the view from the top is worth it.” Vijay Mishra
Yesterday South Africa’s Finance Minister, Tito Mboweni, delivered the supplementary budget update. Minister Mboweni brought into focus the stark reality facing the South African government and the need for structural and political reform.
Some of the issues highlighted by the Minister were the large decline in tax revenue. Tax revenue is forecast to decline by over R304 billion. Other key points highlighted by the Minister
Government borrowing will have to increase
A far greater budget deficit is forecast
Debt servicing is becoming increasingly unaffordable
In closing, the Minister warned that if structural reforms were not implemented timeously, South Africa could face a sovereign debt crisis. To read more on the supplementary budget update please click on the link to read the thought’s of Stanlib’s Chief Economist, Kevin Lings.
