What does Budget 2019 mean for you?

Budget 2019 is essential for our economy as a whole, and we must hope that Finance Minister Tito Mboweni’s “It is time for us to sow the seed of renewal and growth” presages a new era of prosperity for us all.

However, how does Budget 2019 affect you and your business in a practical sense? For a change, there were relatively few tax adjustments proposed – we list them for you and discuss their impact. Equally important is our list of taxes that have been left unchanged.

We end off with some tax tables conveniently summarising what’s new, and what’s not.

The following proposed tax changes were announced:

• Income tax rates are left unchanged. The primary rebate was marginally increased but the overall effect of this is that individuals will pay R12.8 billion more in tax – the so called “bracket creep” which means you pay higher taxes as salary increases will put you into higher tax brackets.
• “Sin” taxes have all been increased with beer, wine, spirits and cigarettes going up on 1 April (see tables below). Indirect taxes will bring R2.3 billion into the fiscus in the 2019/20 tax year.
• The Sugar Tax will be increased to 2.21cents per gram up from 2.1 cents per gram.
• The new Carbon Tax will come into effect on 1 June this year – originally intended for 1 January but only passed in Parliament in February. The tax will have a three year phase-in and is primarily intended to fulfil South Africa’s pledge to reduce carbon emissions by 50% by 2030. It will mean substantial administration in affected industries such as engineering.
• A carbon levy will go into effect on 5 June and will be charged on the fuel price at 9 cents per litre.
• Micro Business Turnover Tax. There is a marginal decrease in the Small Business Corporation Tax

The following taxes are unchanged:

• Dividend tax at 20%.
• Retirement savings contribution limit remains at 27.5% of income.
• Capital Gains Tax at 18% for individuals, 22.4% for companies and 36% for trusts.
• Company Tax at 28% and Trusts at 45%.
• Transfer Duties, Tyre Levies, Plastic Bag Levy, Incandescent Light Levy and other Environment Levies.
• All withholding taxes.
• The Interest Exemption on Income Tax – R23,800 if you are under 65 and over 65 R34,800.
• There is no change to the Medical Tax Credit as the country begins to phase in National Health Insurance.

For expert advice on your personal and company tax contact Tuffias Sandberg, also download a copy of our electronic Tax Guide for 2019/2020 here.