21 February 2019 by Special Edition Budget Speech Alert 2019

Personal income tax rates

Many predicted that, given the already small tax base in South Africa, the already high personal income tax rates, the significant increases in tax rates over recent years and the current state of the economy, there would be very few changes to personal income tax rates in the Budget Speech. In recent years, South Africans faced an increase in personal income tax rates (refer for example to the 45% tax bracket introduced for individuals earning R1,5 million and above), the value-added tax rate, dividend withholding tax rate and the capital gains tax inclusion rates.

During the Budget Speech the Minister proposed no changes to the personal income tax brackets (with no adjustment for inflation). In fact, it was specifically stated that, to limit the negative impact on economic growth, the Budget proposes no increase in tax rates in any category. Instead, the Minister proposes to increase tax collections by R12,8 billion by not adjusting tax brackets for inflation.

The Budget stated that tax administration problems partly explain poor revenue-collection. The proposal is to improve tax collections by restoring the efficiency of SARS. It was stated that, in the short-term, such improvements may be more effective in raising revenue than further substantial tax increases.

The primary, secondary and tertiary rebates will be increased by 1,1%, providing a small relief for inflation. The primary rebate will increase to R14,220, the secondary rebate will increase to R7,794 and the tertiary rebate will increase to R2,601.

The Minister proposes to increase the tax-free threshold for personal income taxes to R79,000 for taxpayers below the age of 65, R122,300 for taxpayers aged 65 years and older, and R136,750 for taxpayers aged 75 and older.

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