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by Andrew Duncan
The National Budget speech, as well as the Budget Review, were available on the National Treasury Website prior to the speech given by the Minister. I paged through the various sections and heaved a sigh of relief because it seemed a “tinkering” type Budget that I would not need to prepare a commentary or attend any presentations. Luckily I, nevertheless, went to Deloittes’ presentation and listened to the irrepressible Brian Kantor debate philosophies with Keith Engle, the Chief Director of Policy at National Treasury. The duel was fascinating and the concepts fundamental to the economic well-being of our country.
For the technical stuff:
- There were no tax surprises, no increases, no new taxes, but a well of investigative proposals as to changes of approach. There is, however, a new gambling tax, being a 15% withholding tax on winnings above R25 000,00 as from 1st April 2012!
- SARS intends to modernize and broaden its base. Implicit in this is a determination to simplify the tax system, particularly for the individual.
- The tax brackets have been extended, but the rates remain unchanged.
- No change to Estate Duty or Donations Tax.
- There have been some minor changes to CGT and, in particular, an increase of the exclusion to R200 000 on death.
- No change to VAT, but Transfer Duty has been substantially lessened so that the 8% rate applies only as from R1,5 million. Interestingly, the rates apply across the board to companies and trusts, and not just to individuals as was previously the case.
- The previously suggested possible abolition of Estate Duty and Donations Tax is not mentioned, probably because of political and redistributive wealth issues notwithstanding the relative minuscule input of those taxes.
- In his State of the Nation speech President Zuma promised that his finance Minister was going to reveal all in regard to Exchange Control, but not a word. My stomach had suggested complete abolition – but wrong again!
- STC will be replaced on 1 April 2012 with a dividend tax. This led to a whole debate about the taxation of “income” being different depending on the title given to it. A dividend or a preference share “distribution” is tax free. Interest is subject to full tax. Foreign dividends are, likewise, subject to full tax less the deductions applicable. Capital Gains are subject to 10% tax. Dividends as of 1st April will be subject to a withdrawal tax of 10%.
- The view of Treasury is that there should be uniformity between these different types of income or products. There is no reason why receipts from a preference share should be different from a loan.
We are in for some interesting changes to the Tax Act!
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