The Finance Minister, along with government, was faced with some difficult decisions when balancing the country’s books this year.
State Owned Enterprises needed rescuing (as usual), and the economy needed to be revived so that it could start growing again.
The South African taxpayer is, of course, expected to save the day, although all of this had to be done without screwing us all over on our personal income tax.
I think we know where South Africans stand on the misuse of their tax money, but on we go.
Here’s IOL with more:
Personal income tax has comprised at least a third of South Africa’s total tax revenue in recent tax years, despite growing unemployment. The 2019 Budget, presented in February, forecasts that personal income tax will account for nearly 39% of tax collected during the upcoming (2019/20) tax year.
Given that we are in an election year and that the tax base is fragile, it’s not surprising that the Finance Minister and the National Treasury avoided direct increases to the statutory tax tables used to calculate PAYE for employees in the budget.
Oh, we got off lightly.
What government has done, though, is use inflation in its favour to introduce some sneaky tax increases. Here are the three to look out for, especially if you’re a payroll manager or employee:
Bracket creep:
The statutory tax tables used by payrolls and employers have not been changed for 2019/20, nor have the brackets been adjusted for inflation.
This effectively amounts to an indirect tax increase that will yield a revenue saving of approximately R12,8 billion for government’s coffers.
Medical aid credit not adjusted for inflation:
As proposed in the 2018 Budget, the Finance Minister did not apply an inflationary increase to the Medical Tax Credit, which allowed him to raise an extra R1 billion in revenue for the year.
Surprisingly, these funds will be allocated to general tax revenue rather than ring-fenced for healthcare. In previous tax years, revenue generated from below-inflation increases on medical scheme credits was used to fund National Health Insurance (NHI) pilot projects.
Business travel deduction left untouched:
The Budget leaves the per-kilometre cost rates used to determine tax deductions for business travel untouched. By not increasing travel rates to account for inflation, government effectively increases income tax collection at the cost of the taxpayer.
This will obviously come as a blow to people who claim travel expenses from their employers.
We can only hope that as things progress, the pressure on taxpayers may ease up in some form.
What we can learn in the meantime from these stealthy increases is that we have to stay on top of things when it comes to the tax game.
To make sure you’re one step ahead, it’s smart to bring in a dedicated expert who can manage your business or personal taxes.
Galbraith | Rushby offer professional tax compliance and advisory services to individuals and businesses.
Let them keep abreast of things like sneaky tax hikes, while you focus on what’s important – growing your business.
[source:iol]
