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 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.

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Presentation on theme: " 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."— Presentation transcript:

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4  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.”

5  Main tax proposals:  Personal income tax relief of R8.1billion  3 rd 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.

6 Where does tax revenue come from?

7 R million Personal income tax (PIT) Corporate income tax (CIT) Secondary tax on companies (STC) Value Added Tax (VAT) Fuel levyCustoms duties 1 Specific excise duties Other 2 Total tax revenue 2004/ / / / / / Percentage of total 2004/ %19.9%2.1%27.7%5.4%3.6%3.7%6.3%100.0% 2005/ %20.7%2.9%27.4%4.9%4.4%3.5%6.1%100.0% 2006/ %24.0%3.1%27.1%4.4%4.8%3.3%4.9%100.0% 2007/ %24.5%3.6%26.3%4.1%4.6%3.2%4.3%100.0% 2008/ %26.5%3.2%24.7%4.0%3.6%3.2%3.6%100.0% 2009/ %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% 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%

8 Number Individuals 1 Companies (CIT) 1 Trusts 1 PAYE 1 VAT 1 SDL 2 UIF / N/A 2005/ N/A 2006/ / / / Percentage year-on-year growth 2004/05 9.0%14.2%12.4%10.2%7.8% 2005/06 8.8%13.1%8.1%9.0%9.6% 2006/07 6.4%15.5%8.6%5.7%6.9% 2007/08 9.3%30.0%2.8%8.8%10.1%-0.2%0.2% 2008/09 6.5%15.8%2.0%3.8%-1.0%0.2%2.7% 2009/10 6.9%2.4%-15.4%0.4%-7.1%3.1%0.5%

9 Personal income tax

10  Personal tax relief:  50% to taxpayers with an income < R p.a.  33% to taxpayers between R – R  12% to taxpayers between R – R  5% to accounting officers  Otherwise known as taxpayers above one million rand taxable income

11  Tax brackets  0 – %  – R %  – R %  – R %  – R %  > R %

12  Rebates: ◦ PrimaryR ◦ SecondaryR ◦ Third rebateR  Tax Thresholds: ◦ <65R ◦ >65R ◦ >75R

13  Tax savings: ◦ Younger than 65 ◦ R p.a.R 495 ◦ R p.a.R ◦ R p.a.R ◦ R p.a.R ◦ R p.a.R ◦ R p.a.R 4 175

14  Tax savings: ◦ Older than 65 and younger than 75 ◦ R p.a.R 265 ◦ R p.a.R 832 ◦ R p.a.R ◦ R p.a.R ◦ R p.a.R ◦ R p.a.R ◦ R p.a.R 4 512

15  Tax savings: ◦ Older than 75 ◦ R p.a.R ◦ R p.a.R ◦ R p.a.R ◦ R p.a.R ◦ R p.a.R ◦ R p.a.R ◦ R p.a.R 6 512

16  Savings ◦ Interest exemptions: ◦ Below 65R (2011 R ) ◦ Over 65R (2011 R ) ◦ Foreign R 3 700

17  Savings ◦ Incentivised savings schemes:  Housing (1 st time buyers)  Higher education

18  Retirement  2011/12 ◦ Pension funds: ◦ Greater of 7.5% from RFI or R1 750 ◦ Arrear contributions – R ◦ 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

19  Retirement “For every benefit you receive a tax is levied” Ralph Waldo Emerson

20  Retirement  2012/13 ◦ Pension funds ◦ Employer’s contribution – taxable fringe benefit ◦ 22.5% of taxable income deductible (RA, Pension and provident funds) ◦ Minimum deduction R ◦ Maximum deduction R ◦ Provident funds ◦ Limit withdrawals to one-third

21  Retirement  Lump sum benefits - Retirement  %  – % of amount above R  – R plus 27% of amount above R  and aboveR plus 36% of amount above R

22  Retirement  Lump sum benefits - Withdrawal  %  – % of amount above R  – R % of amount above R  and aboveR plus 36% of amount above R

23  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

24  National health insurance  Phased in over 14 years  Subsidised by: ◦ Payroll tax ◦ VAT ◦ Personal income tax surcharge ◦ Co-payments and user charges

25  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)

26  General:  Consistent tax treatment of all forms of income from capital (interest, dividends, capital gains) to be considered  CG exclusions increased: ◦ Annual R ◦ DeathR ◦ SBC disposalR  Capital gains on forex (for individuals) to be removed  Withholding tax of 15% on gambling winnings above R from 1 April 2012 (including National Lottery)  Cross border withholding tax on interest – 10%

27 Corporate tax

28  Corporate tax rates  Ltd, Pty (Ltd) & CC28%  Personal Service Companies33%  Foreign resident companies33%

29  Small Business Corporation  0 – %  – % of amount above R  and aboveR % of the amount above R

30  Micro Businesses  Taxable turnover  0 – %  % of amount above R  – R % of the amount above R  – R % of the amount above R  and aboveR % of the amount above R

31  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 businesses have registered  88% was registered previously

32  Other taxes and duties  VAT14%  Securities transfer tax0.25%  Transfer duties (Individuals): ◦ 0 – % ◦ – % of value above R ◦ – R % of value above R ◦ and aboveR % of the value above R

33  Other taxes and duties  Notional input VAT on fixed property:  Delinked from transfer duty  Lower of ◦ Selling price ◦ Open-market value ◦ Current municipal value ◦ VAT-inclusive acquisition price

34  Other taxes and duties  STC10%  Dividends tax1 April 2012

35  Other taxes and duties  Fuel taxes 93 Octane PetrolDiesel General fuel levy RAF Levy Customs Total Percentage of pump price29.6% 30.3%

36  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

37  Tax policy research projects  Taxation of financial derivatives  Taxation of long-term insurers  Housing tax incentive (< R ) for developers  Provincial motor vehicle licence fees  Estate duty  VAT and education accommodation  VAT on treatment of public passenger transport services

38  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 – 1683)


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