Author: Jaco Leuvennink (Fin24). Finance Minister Pravin Gordhan’s first comeback National Budget tabled on Wednesday afternoon in Parliament was relatively calm and workmanlike one after all the expectations of tax hikes and spending cuts amid tough economic times. He stressed the need to reaffirm government’s commitment to close the gap between spending and revenue, implementing a plan for stronger economic growth and cooperation between government and the business sector. That should keep the rating agencies that want to downgrade SA’s debt position to junk status temporarily at bay.
Author: Nyasha Musviba
Budget 2016 wrap: Gordhan dishes out tough love for everyone
Author: Thalia Holmes (Mail & Guardian). Finance Minister Pravin Gordhan’s budget focused on reining in government expenditure, raising tax revenues and preventing a ratings downgrade. This February, Finance Minister Pravin Gordhan is everyone’s Valentine. But civil servants may feel he’s handing out empty boxes of chocolate and wilted roses. On Wednesday, Gordhan faced the unenviable task of presenting a budget speech that straddled almost impossible territory. He did it with an almost abrasive optimism – one that, at times, seemed disingenuous with the economic and social desperation that has gripped many South Africans. He had a melody in his heart, repeated as a refrain throughout his speech: “We are resilient. We are committed. We are resourceful.”
Budget 2016 – Gordhan announces sugar tax
Author: Lynley Donnelly (Mail & Guardian). Finance Minister Pravin Gordhan has revealed plans to introduce a tax on sugar-sweetened beverages, similar to the sin taxes on alcohol and tobacco. Among the sins that the government taxes, you can now include sugar along with the likes of alcohol and tobacco. In his 2016 budget speech released on Wednesday Finance Minister Pravin Gordhan announced plans to introduce a tax on sugar-sweetened beverages.
Budget 2016 – Budget in a nutshell: higher income taxes and a tighter belt for government
Author: Linda Ensor (BDlive). A higher tax burden for all except low- to middle-income earners, a higher fuel levy and a lower rate of growth in government expenditure this year have allowed Treasury to fill the holes left in its budget by lower revenue collection. The measures announced by Finance Minister Pravin Gordhan in the R1.5-trillion budget he tabled in Parliament on Tuesday are just the start of what is anticipated to be a tough three years ahead as the government battles to ward off a credit ratings downgrade, address falling revenue and reignite economic growth.
Budget 2016 – A budget of prods and tweaks in the right direction
Finance minister Pravin Gordhan adopted a tenor at the start of his budget speech which, at last, matches SA’s parlous economic position. Gone is the attitude of faux bullishness, underpinned by some measured caution, that were the hallmarks of previous budget speeches, many presented by himself, and his predecessor Nhlanhla Nene. In its place was a more humble, more real, and more appealing presentation. It was, in many ways, the state of the nation speech that President Jacob Zuma should have given earlier this month. “We are conscious of the difficulties we face. Our resilience as a nation, black and white, can propel us to a better future if we make the right choices,” he said.
Budget 2016 – The re-characterisation of proceeds in the case of a share buyback
It was announced as part of the Budget proposals that National Treasury may recharacterise the proceeds that are received by a shareholder that is a company in circumstances where it disposes of its shares through means of a share buyback as opposed to selling the shares outright to a third party. This conundrum is currently arising on a daily basis where a shareholder in a company has two ways in which to dispose of the shareholding in the company, being:
Budget 2016 – The anomaly that dividends are not exempt when declared by a reit
The introduction of tax legislation pertaining to Real Estate Investment Trusts (REITs) has resulted in significant development of this industry over the last few years. Apart from the fact that a REIT is not subject to capital gains tax in respect of properties that it disposed of, an additional consequence is that dividends declared by a REIT to South African shareholders are not exempt, but are in fact part of taxable income. The distribution is also deductible in the hands of the REIT on the basis that a flow-through principle is essentially adopted with reference to rentals and similar income that are received by the REIT.
Budget 2016 – Adjustments to personal income tax
Following an increase in individual tax rates in the 2015 Budget and in light of the current economic circumstances which include lower estimated tax revenues, it was highly anticipated that the Minister would announce an increase in personal income tax rates in the 2016 Budget. Expectations varied between an increase in the maximum marginal rate of tax of 1% to 4%, bringing the maximum marginal rate of tax within the 42% to 45% range. It is thus with great surprise that the 2016 Budget introduces adjustments to the bottom three personal income tax brackets which effectively relieves the impact of inflation on lower- and middle-income earners. No amendments to the marginal tax rates were proposed.
Budget 2016 – Special Voluntary Disclosure Programme in respect of offshore assets and income
Following recent rumours that the Minister may announce an amnesty in respect of offshore assets and income, National Treasury released a media statement earlier today announcing the introduction of such a Special Voluntary Disclosure Programme (VDP). According to the media statement, the purpose of the VDP is to give non-compliant taxpayers an opportunity to voluntarily disclose offshore assets and income. The media statement warned that, with a new global standard for the automatic exchange of information between tax authorities providing SARS with information regarding such offshore assets and income from 2017, time is running out for taxpayers who have not disclosed assets abroad. The VDP will provide both individuals and companies with an opportunity to regularise their tax and exchange control affairs through one joint process.
Budget 2016 – Venture Capital Companies
Section 12J of the Income Tax Act was introduced in 2008 to stimulate much-needed equity funding for small businesses. It provides for the formation of an investment holding, described as a Venture Capital Company (VCC). Investors subscribe for shares in the VCC and claim an income tax deduction for the subscription price incurred. The VCC must then deploy most of these subscription proceeds within three years by subscribing for shares in investee companies.