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Budget Update 2024/2025 Tax Proposals and Highlights

Henri Pieters, a core tax specialist, presented the Budget Update for 2024/2025, covering various tax proposals and highlights. The update includes changes to excise duties, retirement reforms, and tax incentives. No alterations were made to personal income tax brackets, rebates, or medical credits. The presentation details the allocation of funds and tax tables for individuals, showcasing tax rates based on taxable income. Key areas covered include salary earners, small business corporations, capital gains tax, and other tax matters.

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Budget Update 2024/2025 Tax Proposals and Highlights

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  1. Budget 2024/25 1 Budget Update 2024/2025

  2. Date: 27 February 2024 Presenter: Henri Pieters (Core Tax specialist: Wessel Smit) 2 Budget Update 2024/2025

  3. About the presenter Henri Pieters (Core Tax specialist: Wessel Smit) • • • B.Compt (Hons) HDip tax Mcom (Taxation) CA(SA) and Director of Core Tax (Pty) Ltd He is a member of the SAICA Tax administration subcommittee and previous member of the SAICA National Tax Committee Wessel has been part time tax lecturer at the University the Free State in the CTA, MBA and post graduate tax courses He makes annual contributions to SILKE on Income tax. Wessel provides various taxation related consulting including tax opinions, presentation of Taxation Seminars and training • of • • services 3 Budget Update 2024/2025

  4. Budget 2023/24 Budget 2024/25 4 Budget Update 2024/2025

  5. Topics Budget 2025: 1. Budget Tax Proposals and Other Tax 2. Budget 2025 3. Summary Tax Proposals 4. Salary earners and individuals 5. Small business corporations 6. Capital gains tax 7. Companies 8. Trusts 9. Value Added Tax 10. Transfer Duty 11. Environmental Taxes 12. Fuel Levy 13. Important Amendments 5 Budget Update 2024/2025

  6. Budget Tax Proposals & Other Tax Matters 6 Budget Update 2024/2025

  7. Scope of the seminar •Please note that this presentation deals with the February 2024 Budget speech proposals which have not yet been drafted into the tax legislation. •The final amendment act might differ from the proposals. 7 Budget Update 2024/2025 Budget Update 2024/2025

  8. Budget 2024/25 8 Budget Update 2024/2025

  9. Where the money comes from 2024/25 Other 6% Fuel Levy 5% Customs & Excise Duty 8% Personal Income Tax 40% VAT 25% Corporate Tax 16% 9 Budget Update 2024/2025

  10. How it will be spent? How will it be spent? Learning and culture Health Social Development Community development Economic development Peace and Security General Public Services Payment for financial assets 10 Budget Update 2024/2025

  11. Summary Tax Proposals 11 Budget Update 2024/2025

  12. Budget Highlights 2024/2025 • 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 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. 12 Budget Update 2024/2025

  13. Salary earners and individuals 13 Budget Update 2024/2025

  14. 14 Budget Update 2024/2025

  15. Tax of Individuals •The 2023 Budget provides no change to personal income tax brackets, rebates and medical tax credits. 15 Budget Update 2024/2025

  16. Tax Tables - Individuals Unchanged 2024/2025 2023/2024 Taxable Income (R) Rate of Tax (R) Taxable Income (R) Rate of Tax (R) 0 to 237 100 18% 0 to 237 100 18% 237 101 to 370 500 42 678 + 26% 237 101 to 370 500 42 678 + 26% 370 501 to 512 800 77 362 + 31% 370 501 to 512 800 77 362 + 31% 512 801 to 673 000 121 475 + 36% 512 801 to 673 000 121 475 + 36% 673 001 to 857 900 179 147 + 39% 673 001 to 857 900 179 147 + 39% 857 901 to 1 817 000 251 258 + 41% 857 901 to 1 817 000 251 258 + 41% 1 817 001 and above 644 489 + 45% 1 817 001 and above 644 489 + 45% 16 Budget Update 2024/2025

  17. Rebates Unchanged 2025 2024 Rebates for natural persons Under 65 – Primary 65 and over – Secondary 75 and over - Tertiary (R) (R) 17 235 9 444 3 145 17 235 9 444 3 145 17 Budget Update 2024/2025

  18. Tax Thresholds Unchanged 2025 (R) 2024 (R) Under 65 (primary) 65 to 74 (secondary) 75 and older (tertiary) 95 750 148 217 165 689 95 750 148 217 165 689 18 Budget Update 2024/2025

  19. Interest Exemption Unchanged 2025 (R) 23 800 34 500 2024 (R) 23 800 34 500 Under 65 Over 65 No future inflation adjustments – Replaced by section 12T 19 Budget Update 2024/2025

  20. Tax Free Investments Unchanged 2025 (R) 36 000 500 000 2024 (R) 36 000 500 000 Annual Limit Lifetime Limit Any amount received from a tax-free investment is exempt from normal tax (this includes normal income on the investment as well as any profit arising from the sale of the investment). The following requirements must be met: • The investment must be made by a natural person or the deceased or insured estate of a natural person • The investment must be a financial instrument or policy that is administered by a person or entity as designated by the Minister of Finance 20 Budget Update 2024/2025

  21. Medical Tax Credits Unchanged 2025 (R) 364 364 246 2024 (R) 364 364 246 1stDependent 2ndDependent Additional Dependents 21 Budget Update 2024/2025

  22. Travel Allowance Deemed Expenditure Table • Reimbursive tax-free rate per kilometre was increased from R4.64/km to R4.84/km. 22 Budget Update 2024/2025

  23. Travel Allowance Deemed Expenditure Table 23 Budget Update 2024/2025

  24. Subsistence Allowances •Travel in the Republic (2025 tax year) •meals and incidental costs: R548 (2024: R522) per day •incidental costs only: R169 (2024: R161) per day •Meals and incidental costs per day for a day trip: R 169 (2024: R 161) •Travel outside the Republic •Various from country to country. Please refer to SARS website, www.sars.gov.za for latest rates. 24 Budget Update 2024/2025

  25. Retirement Fund Lump Sum Withdrawal Benefits Unchanged Taxable income Rate of tax R 0 – 27 500 R 0% of taxable income 27 501 - 726 000 18% of taxable income above 27 500 726 001 – 1 089 000 125 730 + 27% of taxable income above 726 000 1089 001 and above 223 740 + 36% of taxable income above 1 089 000 25 Budget Update 2024/2025

  26. Retirement Fund Lump Sum Benefits on Retirement or Severance Unchanged Taxable income Rate of tax R R 0 – 550 000 0% of taxable income 550 001 – 770 000 18% of taxable income above 550 000 770 001 – 1 155 000 39 600 + 27% of taxable income above 770 000 1 155 001 and above 143 550 + 36% of taxable income above 1 155 000 26 Budget Update 2024/2025

  27. Small business corporations 27 Budget Update 2024/2025

  28. Small Business Corporations Unchanged Taxable income Rate of tax R R 0 – 95 750 0% of taxable income 95 751 – 365 000 7% of taxable income above 95 750 365 001 – 550 000 18 848 + 21% of taxable income above 365 000 550 001 and above 57 698 + 27% of the amount above 550 000 28 Budget Update 2024/2025

  29. Capital gains tax 29 Budget Update 2024/2025

  30. Capital Gains Tax Exclusions Unchanged For Natural Persons 2025 (R) 2024 (R) Annual Exclusion Annual exclusion in year of death – gains and losses Disposal of small business by natural person if over age 55 Max market value of assets to qualify as a small business 40 000 40 000 300 000 300 000 1 800 000 1 800 000 10mill 10mill 30 Budget Update 2024/2025

  31. Capital Gains Tax Exemptions Unchanged 2025 (R) 2024 (R) Primary Residence Exclusion 2,0 m 2,0 m 31 Budget Update 2024/2025

  32. Capital Gains Tax Effective Rates 2024/2025 Taxpayer Inclusion Rate (%) Statutory Rate (%) Effective Rate (%) Unchanged Individuals Trusts Special Other Companies Ordinary – YOAafter 31 March 2023 Small business corporation Employment company (personal service provider) Foreign company (SAbranch) 40 0 – 45 0 – 18 40 80 0 – 45 45 0 – 18 36 80 80 80 80 27 21.6 0 – 21,6 21,6 21,6 0 – 27 27 27 32 Budget Update 2024/2025

  33. Companies 33 Budget Update 2024/2025

  34. Rates changed Unchanged  Companies - 27%  Global minimum tax at 15% applies to large multinational groups of companies from 1 January 2024.  Dividend withholding tax rate remain at 20% 34 Budget Update 2024/2025

  35. Trusts 35 Budget Update 2024/2025

  36. Trusts Unchanged • The tax rate on trusts are unchanged at 45%. 36 Budget Update 2024/2025

  37. Value Added Tax 37 Budget Update 2024/2025

  38. VAT Unchanged • The vat rate are unchanged at 15%. 38 Budget Update 2024/2025

  39. Transfer Duty 39 Budget Update 2024/2025

  40. Transfer duty Unchanged Value of property (R) Rate (R) 0 – R 1 100 000 0% of property value 1 100 001 – 1 512 500 3% of property value above R 1 100 000 1 512 501 – 2 117 500 12 375 + 6% of property value above R 1 512 500 2 117 501 – 2 722 500 48 675 + 8% of property value above R 2 117 501 2 722 501 – 12 100 000 97 075 + 11% of property value above R 2 722 500 12 100 001 and above 1 128 600 + 13% of property value above R 12 100 000 40 Budget Update 2024/2025

  41. Environmental Taxes 41 Budget Update 2024/2025

  42. Plastic bag levy •Plastic bag levy to increase to 32 cents per bag from 1 April 2024. 42 Budget Update 2024/2025

  43. Fuel Levy 43 Budget Update 2024/2025

  44. Fuel Levy Unchanged •No changes to the general fuel levy and road accident fund levy •Thus: •the general fuel levy will stay on R3.85 per litre of petrol and R3.70 per litre of diesel •the road accident fund levy will still be R2.18 per litre for both petrol and diesel 44 Budget Update 2024/2025

  45. Excise duties on alcohol and tobacco 45 Budget Update 2024/2025

  46. Excise duties on alcohol and tobacco •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. 46 Budget Update 2024/2025

  47. Additional Policy and administrative amendments 47 Budget Update 2024/2025

  48. Additional policy and administrative amendments •Incentivising local electric vehicle production • Producers of electric vehicles in South Africa will be able to claim 150 per cent of qualifying investment spending as an incentive to aid the transition to new energy vehicles. •Implementing the global minimum corporate tax • South Africa will implement a global minimum corporate tax, with multinational corporations subject to an effective tax rate of at least 15 per cent, regardless of where its profits are located. •Learnership tax incentive extension •Two-pot retirement reform to be implemented on 1 September 2024. 48 Budget Update 2024/2025

  49. Thank you

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