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New tax measure takes aim at offshore trusts – Budget 2017/18

Author: David Warneke, Head of Technical Tax, BDO SA. A bombshell hidden in the detail of the 2017 Budget review relates to the taxation of offshore trusts. It refers to the 2015 Budget review in which it was announced that measures would be introduced to the tax treatment of foreign companies held by interposed trusts. No specific countermeasures were however introduced and the 2017 Budget review proposes that such countermeasures be introduced to curb abuses.

South Africas Budget 2017/18 in Perspective

Author: Ferdie Schneider, National Head of Tax at BDO SA. The Minister of Finance earlier today delivered his Budget Speech for 2017/18 amidst depressed GDP prospects, and negative balance of payment figures. GDP is estimated to be 0.5% in 2016, increasing to 1.3%, 2%, and 2.2% in 2017, 2018, and 2019, respectively. Consumer Price Index (CPI) inflation is estimated to be 6.4% in 2016 and 2017, and decrease to 5.7% and 5.6% in 2018 and 2019, respectively. The balance of payments current account as a percentage of GDP is expected to slightly decrease from 2016 at -4%, 2017 at -3.9%, 2018 at -3.7%, and 3.8% in 2019.

VAT changes from the Budget Speech 2017

Author: Seelan Muthayan, VAT Director, BDO SA. Expanding the VAT Base In order to expand the current VAT base, it is proposed in 2018/19 that the supply of fuel will no longer be zero rated. This will no doubt have a direct impact on transport costs. Government will look at either freezing or reducing fuel levies in order to reduce the impact on transport cost. As part of the focus globally to deal with base erosion and profit shifting, more attention will be given to businesses providing foreign electronic services to South African Consumers. As previously mentioned in the 2015 budget the regulations dealing with which electronic services are subject to VAT will be updated with a view to removing any uncertainties and current practical difficulties being experienced.

Dividends Tax or Anti-Avoidance?

Author: Ian Statham, Corporate Tax Partner and Keelen Snyders,Tax Trainee at BDO Tax Services The Minister of Finance, in his 2017 budget speech, announced an increase in the top marginal rate to 45% for personal income tax. This will apply to individuals earning a taxable income of more than R1,5m per annum. The budget highlighted that this will impact 100 000 taxpayers and contribute almost R10bn to the fiscus.

Income Tax Rates for Individuals for 2017/18

2018 tax year (1 March 2017 – 28 February 2018) – see changes from last year ​Taxable income (R) ​Rates of tax (R) 0 189 880 18% of taxable income 189 881 296 540 34 178 + 26% of taxable income above 189 880 296 541 410 460 61 910 + 31% of taxable income above 296 540 410 461 555 600 97 225 + 36% of taxable income above 410 460 555 601 708 310 149 475 + 39% of taxable income above 555 600 708 311 1 500 000 209 032 + 41% of taxable income above 708 310 ​1 500 001 and above ​533 625 + 45% of taxable income above 1 500 000   2017 tax year (1 March 2016 – 28 February 2017) ​Taxable income (R) ​Rates of tax (R) 0 188 000 18% of taxable income 188 001 293 600 33 840 + 26% Read More …

Budget2017: Inflationary increase for welfare grants

Author: Nicola Mawson (IOL). As s government clamps down on spending, welfare grants are only being increased to compensate for inflation. Parliament The 17 million people who rely on government for welfare grants will have minimal relief from April. This is because the grants are being increased marginally to compensate for inflation. Inflation is currently 6.6 percent, down from the 6.8 percent recorded in December.

2017 South African budget speech summary | tax proposals

Author: ENSafrica Overview The South African Minister of Finance delivered his 2017 budget speech on 22 February 2017, of which some of the key points we have summarised below. He indicated that South Africa needs to raise an additional R28-billion in tax revenues and reduce spending by a total of R26-billion over the next two years. The increase in revenue will be funded mainly by the following measures: a new maximum marginal income tax rate of 45% for those with taxable income over R1.5-million per annum (an increase from the current maximum rate of 41%). an increase in the dividend withholding tax rate from 15% to 20% (effective 22 February 2017). The exemption and rates for foreign dividends will also be adjusted in line with the new rate, effective for years of assessment commencing on or after 1 March 2017. an increase of 30 cents per litre in the general Read More …