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Agenda

• Budget 2014 highlights

• Budget 2014 - Individual Taxes

• Budget 2014 – retirement funds

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Budget framework

• -- Budget deficit of four percent of GDP expected for 2013/14, narrowing to 2.8 percent in 2016/17;

• -- Debt stock as percentage of GDP to stabilise at 44.3 percent in 2016/17;

• -- Tax revenue for 2013/14 expected to be R1 billion higher than projected in 2013 budget;

• -- Real growth in non-interest spending to average 1.9 percent over next three years;

• -- National and provincial government expenditure on travel, catering, consultants and other administrative payments declines as a share of spending;

• -- Expenditure ceiling commits government to spending limits of R1.03trn in 2014/15, R1.11trn in 2015/16 and R1.18trn in 2016/17.

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Spending programmes

• Over next 3 years: -- R410bn on social grants; -- R15.2bn on the economic competitiveness and support package; -- R8.5bn on the Community Work Programme; -- R8.7bn on settlement of land restitution claims; -- R7bn for subsistence and smallholder farmers; -- R78bn on university subsidies and R19.4bn for the National Student Financial Aid Scheme; -- R34.3bn on school infrastructure; -- R22.9bn to upgrade commuter rail services; -- R143.8bn to support municipal infrastructure; -- R42bn on the HIV and Aids conditional grant.

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Tax proposals

-- Personal income tax relief of R9.3bn; -- Adjustments to tax tables relating to retirement lump-sum payments; -- Measures to encourage small enterprise development; -- Clarity on valuation of company cars for fringe-benefit tax purposes; -- Reforms to tax treatment of the risk business of long-term insurers; -- Amending rules for VAT input tax to combat gold smuggling; -- Measures to address acid mine drainage; -- Adjustment of the proposed carbon tax and its alignment with desired emission-reduction outcomes identified by the environmental affairs department.

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Budget highlight

0

200

400

600

800

1 000

1 200

1 400

Revenue Spending

1099.2 1252.3

Budget 2014/15 (in R bn)

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Budget highlight

• Personal tax threshold R70,700 (R67,111)

• Fuel levy up 20c

• Social grants up by 9%

• Medical aid credit R257 first two/R172 additional

• Consider making transfer to preservation fund compulsory when changing employer

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Budget highlight

• Youth employment incentive implemented beginning of this year

• Encourage investments and trades with Africa

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Individual Taxes

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Individual taxes – younger than 65

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Personal income tax rate

Taxable Income (R) Rates of tax

R0 – R174,550 18%

R174,551 – R272,700 25%

R272,701 – R377,450 30%

R377,451 – R528,000 35%

R528,001 – R673,100 38%

R673,101 + 40%

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Individual taxes

Rebates

Primary (Under age 65) R12,726

Secondary (65 – 75) R7,110

Tertiary (age 75 and over) R2,367

Tax threshold

Below age 65 R70,700

Age 65 – 75 R110,200

Age 75 and over R123,350

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Individual taxes

• Interest and dividend income

– Annual exemption on interest R23,800 (age <65) and R34,500 (age 65+)

• Medical aid tax credit

– R257 (R242) for first 2

– R172 (R162) for each additional

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Individual taxes

• Retirement fund lump sum withdrawal benefits – adjustments

Taxable income (R) Rate of Tax

0 – 25,000 0%

25,001 – 660,000 18%

660,001 – 990,000 27%

990,001 + 36%

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Individual taxes

• Retirement fund lump sum benefits or severance benefits – bigger adjustments

Taxable income (R) Rate of Tax

0 – 500,000 0%

500,001 – 700,000 18%

700,001 – 1,050,000 27%

1,050,001 + 36%

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Retirement fund reforms

• From March 2014 2015: – Employer contributions as taxable fringe benefits

in the hands of the employee

– Individuals allowed 27.5% of the higher of taxable income or employment income as deduction, for contributions to pension, provident and retirement annuity funds

– Maximum annual deduction R350,000

– Tax-preferred savings and investment accounts in 2015 2014

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Retirement fund reforms

• From March 2014: – Retirement funds must identify appropriate

preservation funds for exiting members

– Must guide members of converting savings into a regular income after retirement

– More competition promoted to sell living annuities

– Tax treatment of pension, provident and retirement annuity funds simplified and harmonised

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Retirement fund reforms

• From March 2014:

– Vested benefits protected

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Small business tax relief

• Turnover threshold R20m (R14m)

Taxable income (R) Rate of tax

0 – 67,111 0%

67,112 – 365,000 7%

365,000 – 550,000 21%

550,000 + 28%

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Where the budget money comes from

34%

8%

20%

27%

5% 6%

Source

Personal Income Tax

Excise Duties & Customs

Corporate Tax

VAT

Fuel

Other