2024 BUDGET HIGHLIGHTS – BVSA

• No change to personal income tax brackets, rebates, and medical tax credits.
• Increase of between 6.7% and 7.2% in excise duties on alcoholic beverages.
• Increase of between 4.7% and 8.2% in excise duties on tobacco products.
• No change to the general fuel levy and road accident fund levy.
• Plastic bag levy to increase to 32 cents per bag from 1 April 2024.
• Global minimum tax at 15% applies to large multinational groups of companies from 1 January 2024.
• Two-pot retirement reform to be implemented on 1 September 2024.
• Electrical and hydrogen-powered vehicle tax incentive to be introduced for manufacturers in 2026.

 

INDIVIDUALS

Personal income tax rate and bracket structure

Travel allowances

No deduction may be claimed if no logbook is kept. 80% of the travelling allowance must be included in the employee’s remuneration for the purposes of calculating PAYE. The percentage is reduced to 20% if the employer is satisfied that at least 80% of the use of the motor vehicle for the tax year will be for business purposes.

The deemed cost per km is subject to change upon a possible update from national treasury.

Use of company car

The % included in an employee’s taxable income remains at 3.5% of the determined value of the vehicle. Where the vehicle is subject to a maintenance plan, at the time the employer acquired the vehicle, the taxable value is 3.25% of the determined value. Where the vehicle is acquired by the employer under an operating lease, the taxable value is the cost incurred by the employer under the operating lease plus the cost of fuel.

80% of the fringe benefit must be included in the employee’s remuneration for purposes of calculating PAYE. The percentage is reduced to 20% if the employer is satisfied that at least 80% of the use of motor vehicle for the tax year will be for business purposes.

On assessment, the fringe benefit for the tax year is reduced by the ratio of distance travelled for business purposes, substantiated by a logbook, divided by the actual distance travelled during the tax year.

On assessment, further relief is available for the cost of license, insurance, maintenance, and fuel for private travel, if the full cost thereof has been borne by the employee and if the distance travelled for private purposes is substantiated by a logbook.

Retirement fund contributions

Amounts contributed to pension, provident and retirement annuity funds during a year of assessment are deductible by members of those funds. Amounts contributed by employers and taxed as fringe benefits are treated as contributions by the individual employees. The deduction is limited to 27.5% of the greater of the amount of remuneration for PAYE purposes or taxable income (both excluding retirement fund lump sums and severance benefits). The deduction is further limited to the lower of R350 000 or 27.5% of taxable income, before the inclusion of a taxable capital gain. Any contributions exceeding the limitations are carried forward to the immediately following year of assessment, and are deemed to be contributed in that following year. The amounts carried forward are reduced by contributions set off against retirement fund lump sums and retirement annuities.

Tax-free savings accounts

The annual limit on contributions to tax-free savings accounts will remain at R36 000.

Medical expenses

In determining tax payable, individuals are allowed to deduct:

Monthly contributions to medical schemes (a tax rebate referred to as a medical scheme fees tax credit) up to R364 for the individual who paid the contributions and the first dependent on the medical scheme and R246 for each additional dependent; and in the case of:

• Taxpayers 65 and older, or if that person, his or her spouse or child is born with a disability, 33.3% of qualifying medical expenses paid and borne by the individual and an amount by which medical scheme contributions paid by the individual exceed 3 times the medical scheme fees tax credits for the tax year; or
• Any other taxpayer, 25% of an amount equal to qualifying medical expenses paid and borne by the individual and an amount by which medical scheme contributions paid by the individual exceed 4 times the medical scheme fees tax credits for that tax year, limited to the amount which exceeds 7.5% of taxable income (excluding retirement fund lump sums and severance benefits).

                                    

                              

 

VAT

VAT is levied at the standard rate of 15% on the supply of goods and services by registered vendors.

A vendor making taxable supplies of more than R1 million per annum must register for VAT.

A vendor making taxable supplies of more than R50 000 but not more than R1 million per annum may apply for voluntary registration.

DONATIONS TAX

The annual donations tax exemption for natural persons remains unchanged at R100 000 and the rate also remains 20%.

If the donations exceed R30 million, the rate of donations tax will change to 25%.

In the case of a taxpayer who is not a natural person, the exempt donations are limited to casual gifts not exceeding R10 000 per annum in total.

Dispositions between spouses, South African group companies, and donations to certain public benefit organisations are exempt from donations tax.

CAPITAL GAINS TAX

Maximum effective rate of tax:

Individuals and special trusts                             18.00%

Companies                                                             21.60%

Other trusts                                                           36.00%

 

The exclusion threshold for capital gains and losses for individuals and special trusts remains at R40 000.

The annual exclusion for individuals in the year of death remains at R300 000. The primary residence exclusion for individuals is R2 million.

The capital gains exclusion on disposal of a small business when a person is at least 55 years old, will remain at R1.8 million when the market value of the active business assets does not exceed R10 million.

DIVIDENDS TAX

Dividends received by individuals from South African companies are taxed at a rate of 20%, which is withheld by the entities paying the dividends to the individuals.

TRANSFER DUTY

Transfer duty is payable at the following rates on transactions that are not subject to VAT:

ESTATE DUTY

Estate duty is levied at a rate of 20% on the first R30 million and at a rate of 25% above R30 million on property of residents and South African property of non-residents. A basic deduction of R 3.5 million is allowed in the determination of an estate’s liability for estate duty as well as deductions for liabilities, bequests to public benefit organizations and property accruing to surviving spouses.

SECURITIES TRANSFER TAX

Tax is imposed at a rate of 0.25 of a per cent on the transfer of listed or unlisted securities. Securities consist of shares in companies or member’s interest in close corporations.

DISCLAIMER

BVSA accepts no liability whatsoever for any losses, damage or cost incurred which may arise from information published in this document. Please contact anyone of the directors of BVSA before any decisions are made regarding information published.