pravin gordhan quotes: “we at sars should try to be creative and to demonstrate goodwill. but out...

Budget 2011/2012

Budget 2011/12

Budget 2011/12 Pravin Gordhan quotes:

“We at SARS should try to be creative and to demonstrate goodwill. But out there, you will always have those who are being deliberately evasive. And honest taxpayers will want us to create a level playing field.”

This is probably due to companies paying out lower bonuses and lower than estimated wage increases.”

Budget 2011/12 Main tax proposals:

Personal income tax relief of R8.1billion 3rd rebate for individuals >75 years Conversion of medical tax deduction to tax

credits Transfer duty relief Higher taxes on fuel Higher taxes on alcohol and tobacco Taxation of gambling winnings.

Budget 2011/12

Where does tax revenue come from?

Budget 2011/12

R million

Personal income tax (PIT)

Corporate income tax (CIT)

Secondary tax on companies

(STC)

Value Added Tax

(VAT)

Fuel levy Customs duties1 Specific excise duties

Other2 Total tax revenue

2004/05 110 982 70 782 7 487 98 158 19 190 12 888 13 067 22 425 354 979

2005/06 125 645 86 161 12 278 114 352 20 507 18 303 14 547 25 404 417 196

2006/07 140 578 118 999 15 291 134 463 21 845 23 697 16 369 24 307 495 549

2007/08 168 774 140 120 20 585 150 443 23 741 26 470 18 218 24 463 572 815

2008/09 195 115 165 378 20 018 154 343 24 884 22 751 20 185 22 427 625 100

2009/10 205 145 134 883 15 468 147 941 28 833 19 577 21 289 25 569 598 705

Percentage of total

2004/05 31.3% 19.9% 2.1% 27.7% 5.4% 3.6% 3.7% 6.3% 100.0%

2005/06 30.1% 20.7% 2.9% 27.4% 4.9% 4.4% 3.5% 6.1% 100.0%

2006/07 28.4% 24.0% 3.1% 27.1% 4.4% 4.8% 3.3% 4.9% 100.0%

2007/08 29.5% 24.5% 3.6% 26.3% 4.1% 4.6% 3.2% 4.3% 100.0%

2008/09 31.2% 26.5% 3.2% 24.7% 4.0% 3.6% 3.2% 3.6% 100.0%

2009/10 34.3% 22.5% 2.6% 24.7% 4.8% 3.3% 3.6% 4.3% 100.0%

Nominal percentage increase from 2004/05 to 2009/10

Cumulative 84.8% 90.6% 106.6% 50.7% 50.2% 51.9% 62.9% 14.0% 68.7%

Per year 13.1% 13.8% 15.6% 8.6% 8.5% 8.7% 10.3% 2.7% 11.0%

Percentage of GDP

2004/05 7.7% 4.9% 0.5% 6.8% 1.3% 0.9% 0.9% 1.5% 24.5%

2005/06 7.8% 5.3% 0.8% 7.1% 1.3% 1.1% 0.9% 1.6% 25.9%

2006/07 7.7% 6.5% 0.8% 7.3% 1.2% 1.3% 0.9% 1.3% 27.0%

2007/08 8.1% 6.7% 1.0% 7.2% 1.1% 1.3% 0.9% 1.2% 27.6%

2008/09 8.4% 7.2% 0.9% 6.7% 1.1% 1.0% 0.9% 1.0% 27.0%

2009/10 8.4% 5.5% 0.6% 6.1% 1.2% 0.8% 0.9% 1.0% 24.5%

Budget 2011/12

Number

Individuals1 Companies (CIT)1 Trusts1 PAYE1 VAT1 SDL2 UIF2

2004/054 115 293 933 136 318 967 302 880 578 138 N/A N/A

2005/064 476 261 1 054 969 344 882 330 194 633 703 N/A N/A

2006/074 764 105 1 218 905 374 411 349 077 677 153 168 933 379 646

2007/085 204 805 1 584 002 384 747 379 675 745 487 168 646 380 218

2008/095 540 646 1 834 009 392 260 393 974 737 885 168 997 390 388

2009/105 920 612 1 878 856 331 954 395 575 685 523 174 165 392 398

Percentage year-on-year growth

2004/059.0% 14.2% 12.4% 10.2% 7.8%

2005/068.8% 13.1% 8.1% 9.0% 9.6%

2006/076.4% 15.5% 8.6% 5.7% 6.9%

2007/089.3% 30.0% 2.8% 8.8% 10.1% -0.2% 0.2%

2008/096.5% 15.8% 2.0% 3.8% -1.0% 0.2% 2.7%

2009/106.9% 2.4% -15.4% 0.4% -7.1% 3.1% 0.5%

Budget 2011/12

Personal income tax

Budget 2011/12 Personal tax relief:

50% to taxpayers with an income < R270 000 p.a.

33% to taxpayers between R 270 000 – R 580 000

12% to taxpayers between R 580 000 – R 1 000 000

5% to accounting officers Otherwise known as taxpayers above one

million rand taxable income

Budget 2011/12 Tax brackets

0 – 150 000 18% 150 001 – 235 000 R 27 000 + 25% 235 001 – 325 000 R 48 250 + 30% 325 001 – 455 000 R 75 250 + 35% 455 001 – 580 000 R120 750 + 38% >580 001 R168 250 + 40%

Budget 2011/12 Rebates:

◦ Primary R 10 755◦ Secondary R 6 012◦ Third rebate R 2 000

Tax Thresholds:

◦ <65 R 59 750◦ >65 R 93 150◦ >75 R104 261

Budget 2011/12 Tax savings:

◦ Younger than 65

◦ R 120 000 p.a. R 495◦ R 200 000 p.a. R 1 195◦ R 300 000 p.a. R 1 895◦ R 400 000 p.a. R 2 895◦ R 500 000 p.a. R 3 615◦ R 750 000 p.a. R 4 175


◦ Older than 65 and younger than 75

◦ R 90 000 p.a. R 265◦ R 120 000 p.a. R 832◦ R 200 000 p.a. R 1 532◦ R 300 000 p.a. R 2 232◦ R 400 000 p.a. R 3 232◦ R 500 000 p.a. R 3 952◦ R 750 000 p.a. R 4 512


◦ Older than 75

◦ R 100 000 p.a. R 2 065◦ R 120 000 p.a. R 2 832◦ R 150 000 p.a. R 3 532◦ R 250 000 p.a. R 4 232◦ R 400 000 p.a. R 5 232◦ R 500 000 p.a. R 5 952◦ R 750 000 p.a. R 6 512

Budget 2011/12 Savings

◦ Interest exemptions:

◦ Below 65 R 22 800 (2011 R 22 300)◦ Over 65 R 33 000 (2011 R 32 000)◦ Foreign R 3 700

Budget 2011/12 Savings

◦ Incentivised savings schemes:

Housing (1st time buyers) Higher education

Budget 2011/12 Retirement

2011/12

◦ Pension funds:

◦ Greater of 7.5% from RFI or R1 750◦ Arrear contributions – R 1 800

◦ Retirement annuity

◦ Greater of..◦ 15% of non-RFI◦ R 1750◦ R3 500 less current pension fund deductions◦ Broaden list of service providers to include:◦ National Treasury’s retail savings bond scheme◦ Collective investment schemes


“For every benefit you receive a tax is levied”

Ralph Waldo Emerson 1803-1882


2012/13

◦Pension funds

◦ Employer’s contribution – taxable fringe benefit◦ 22.5% of taxable income deductible (RA, Pension and

provident funds)◦ Minimum deduction R12 000◦ Maximum deduction R200 000

◦Provident funds

◦ Limit withdrawals to one-third


Lump sum benefits - Retirement 0 - 315 000 0% 315 001 – 630 000 18% of amount above R315 000 630 001 – 945 000 R56 700 plus 27% of amount

above R630 000 945 001 and aboveR141 750 plus 36% of amount

above R945 000


Lump sum benefits - Withdrawal 0 - 22 500 0% 22 501 – 600 000 18% of amount above R22 500 600 001 – 900 000 R103 950 + 27% of amount

above R600 000 900 001 and aboveR184 950 plus 36% of amount

above R900 000

Budget 2011/12 Medical deductions

Contributions to medical schemes and qualifying out-of-pocket medical expenses◦ R 720 for the first two beneficiaries each◦ R 440 for each additional beneficiary◦ Amount above 7.5% of taxable income

Non refundable tax credits from 1 March 2012◦ Relative relief does not increase as the marginal tax

rate of the individual increase◦ Discussion document by end of March 2011

Budget 2011/12 National health insurance

Phased in over 14 years Subsidised by:

◦ Payroll tax◦ VAT◦ Personal income tax surcharge◦ Co-payments and user charges

Budget 2011/12 Fringe benefits – Company cars

3.5% per month on the value (cost incl VAT) 3.25% per month on the value (cost incl VAT) if the

vehicle has a maintenance plan 80% of fringe benefit to be included in remuneration Percentage is reduced to 20% if employer is satisfied

that at least 80% of use are for business purposes Fringe benefit reduced on assessment if log book

kept and submitted Further relief on assessment if employee has borne

cost of licence, insurance, maintenance and fuel for private travel (subject to logbook)

Budget 2011/12 General:

Consistent tax treatment of all forms of income from capital (interest, dividends, capital gains) to be considered

CG exclusions increased:◦ Annual R 20 000◦ Death R 200 000◦ SBC disposal R 900 000

Capital gains on forex (for individuals) to be removed Withholding tax of 15% on gambling winnings above

R25 000 from 1 April 2012 (including National Lottery) Cross border withholding tax on interest – 10%

Budget 2011/12

Corporate tax

Budget 2011/12 Corporate tax rates

Ltd, Pty (Ltd) & CC 28% Personal Service Companies 33% Foreign resident companies 33%

Budget 2011/12 Small Business Corporation

0 – 59 750 0% 59 751 – 300 000 10% of amount

above R59 750

300 001 and above R24 025 + 28% of the amount above R300 000

Budget 2011/12 Micro Businesses

Taxable turnover 0 – 150 000 0% 150 001 - 300 000 1% of amount

above R150 000 300 001 – 500 000 R1 500 + 3% of

the amount above R300 000 500 001 – 750 000 R7 500 + 5% of

the amount above R500 000 750 000 and above R20 000 + 7% of

the amount above R750 000

Budget 2011/12 Micro Businesses

Register for VAT from 1 March 2012 3 year bar on voluntary deregistration to be

lifted SARS empowered to register unregistered

micro businesses Only 7 700 businesses have registered 88% was registered previously

Budget 2011/12 Other taxes and duties

VAT 14% Securities transfer tax 0.25% Transfer duties (Individuals):

◦ 0 – 600 000 0%◦ 600 001 – 1 000 000 3% of value above

R600 000◦ 1 000 001 – 1 500 000 R12 000 + 5% of

value above R1 000 000

◦ 1 500 001 and above R37 000 + 8% of the value above R1 500 000


Notional input VAT on fixed property: Delinked from transfer duty Lower of

◦ Selling price◦ Open-market value◦ Current municipal value◦ VAT-inclusive acquisition price


STC 10% Dividends tax 1 April 2012


Fuel taxes93 Octane Petrol Diesel

General fuel levy 177.50 162.50RAF Levy 80.00 80.00Customs 4.00 4.00Total 261.50 246.51Percentage of pump price 29.6% 30.3%

Budget 2011/12 Tax administration

Voluntary disclosure program will remain open until 31 October 2011

Customs – systems modernisation Audit – SARS to use data provided by credit

bureaus to build tax payer profile and identify non compliance

Budget 2011/12 Tax policy research projects

Taxation of financial derivatives Taxation of long-term insurers Housing tax incentive (< R300 000) for

developers Provincial motor vehicle licence fees Estate duty VAT and education accommodation VAT on treatment of public passenger

transport services

Budget 2011/12 Finally….

“The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing”

Jean Baptiste Colbert (Minister of Finance under King Louis XIV of France. 1619 – 1683)

pravin gordhan quotes: “we at sars should try to be creative and to demonstrate goodwill. but out...

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