The first budget presented by Minister Nene contains the following key items.

 

  • Personal income tax is raised by 1% in all tax brackets except for the lowest. The maximum rate is now 41%, reached at an annual taxable income of R701 300. The tax brackets and rebates are increased by 4.2% to “compensate for inflation”. The income tax rate for trusts is increased to 41%.
  • The interest exemptions remain at current levels and will remain flat in future, as the new Tax Free Savings Accounts will offer savers the tax incentive. This new product has not yet been developed by all financial institutions. We will communicate with you further as suitable products become available.
  • Capital gains tax rates are increased to a maximum of 13.65% for individuals, and 27.31% for trusts, as a result of the increase in income tax rates.
  • Retirement fund contributions remain as is for at least another year. RA contributions therefore remain at 15% of non retirement funding income, with no cap on the maximum value.
  • Donations up to R100 000 per taxpayer continue to be free of donations tax.
  • Property transfer duty now has a new category of 11%, for property purchase values above R2.25 million. There is some relief at the lower levels.
  • The offshore investment allowance increases from R4 million to R10 million per adult person from 1 April 2015, per calendar year. In addition the R1 million individual discretionary allowance remains.
  • A change which is in the offing, but no dates or details are currently available, is the intention to reintroduce a maximum retirement date for RA’s. Currently there is no obligatory date, so the RA can migrate through to the owner’s estate without estate duty.