1.
Creating certainty
Budget 2013
Business School

2. Agenda
General comments
Proposals welcomed
Concerns
National Treasury legislation drafting

3. Tough conditions & Difficult choices
General Comments
We recognise …
Tough conditions & Difficult choices
We applaud …
More efficient spending (rather than increasing taxes)
Tax proposals …
Welcomed, overall
Concerns about prioritisation

4. Aspects welcomed

5. Aspects welcomed Individuals
Tax rate relief
Retirement contributions
Increase in deduction limits
Tax preferred savings & investments
Incentive for youth employment

6. Aspects welcomed Business Small business relief Special economic zones
Certainty on interest- deduction restrictions
Gateway subsidiaries
Registration & Filing
Tax Clearance Certificates

7. Concerns

8. Concerns Personal income tax burden 10% will pay 60%
Capped contributions to retirement funds
Conduit principle for Trusts
Withholding Tax on service fees
Carbon Tax
Prioritisation

9. National Treasury – Legislation drafting
Drafting resource-constraints persist
Increasing incidence of anomalies and errors
Policy debates not being addressed
Period of consolidation required

10. Tough conditions & Difficult choices
General Comments
We recognise …
Tough conditions & Difficult choices
We applaud …
More efficient spending (rather than increasing taxes)
Tax proposals …
Welcomed, overall
Concerns about prioritisation
The cap on retirement contribution deductions was also a proposal in the 2011 Budget speech which has been deferred to 1 March The original proposal has also been revised with the limitations proposed now applying to over and under 45 years of age with a capping of 22.5%/27% limited to R / R respectively. A de minimus deduction is also proposed of R where the percentages would be exceeded. A rollover dispensation similar to the current RAF regime will also apply.
The CGT inclusion rate will be increased from 25% (eff: 10% at marginal rate) to 33.3% (eff:13.33% at marginal rate). However the primary residence, annual exclusions and other thresholds have been increased.
The personal service provider company rate is reduced to 28% which possibly is a result of the reduced arbitrage in effective tax rate with dividends tax at 15% which would have created a 43% effective tax rate for these entities and is now reduced to 38.8%
The increase of the dividends tax rate to 15% is a considerable additional cost to individuals who have invested in companies and is a disincentive to savings. This is seemingly an about turn as the first phase of the replacement of STC with the dividends tax was a reduction of the STC rate from 12% to 10%.
The conversion to medical tax credits was already announced in last years budget. All expenditure will now be subject to the credit regime from 1 March 2014 with taxpayers under 65 being entitled to a credit for medical expenditure in excess of 7.5% of taxable income of 25%. It is now confirmed that the elderly and people with disabilities will also convert to the credit regime from 1 March 2014 at 33.3% for expenses in excess of 3x the medical scheme credits. Post retirement medical aid contributions will now also be taxable fringe benefits which can be converted to tax credits.

11. Questions ...
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12.
Creating certainty
Budget 2013
Business School