Category: Budget 2024/25

The 2024 Budget speech presented by Finance Minister Enoch Godongwana paints a picture of cautious optimism amidst lingering challenges. While acknowledging the calls for fiscal discipline, the budget demonstrates a commitment to both stabilising the debt burden and addressing critical social needs.

Clarifying the translation for hyperinflationary currencies The net income of a controlled foreign company (CFC) is determined in the currency used by that CFC for financial reporting (the functional currency) and is translated into rand at the average exchange rate for that foreign tax year. An exchange item, as defined in the Income Tax Act, is treated as not attributable to any permanent establishment of the CFC if the currency used for financial reporting is that of a country with an official rate of inflation of 100 per cent or more throughout the foreign tax year. However, in contrast to the intention that a hyperinflationary functional currency not be used for translation purposes, section 9D(2A)(k) of the Income Tax Act requires the local currency to be used. It is proposed that the rules be changed so that section 9D(2A)(k) does not allow the use of a hyperinflationary functional currency for Read More …

The contributed tax capital of any company is a notional and ring‐fenced tax amount derived from a deemed market value amount when a foreign company becomes a South African tax resident and the consideration for the issue of a class of shares by a company. It is reduced by any amounts referred to as capital distributions, transferred by the company to the shareholders. It has come to governments attention that the following amendments are needed to further refine the contributed tax capital provisions.

Third‐party backed share anti‐avoidance rules deem dividend yields of preference shares, backed by third parties through an enforcement right of the holder, to be income except where the funds derived from the issue of these third‐party backed shares are used for a qualifying purpose. The anti‐avoidance rules do not apply if the funds derived from the issue of the preference shares in question are used for a qualifying purpose, for example, if the funds are used directly or indirectly to acquire equity shares in an operating company. It has come to governments attention that the following amendments are required to clarify the rules.

Corporate reorganisation rules Clarifying the interaction of the value shifting provisions and the definition of value shifting arrangement in paragraph 1 of the Eighth Schedule Disposals between group companies falling within the ambit of the corporate rollover relief provisions should, in principle, be tax neutral. In essence, rationalising a group of companies can result in the market value of an existing shareholding of one group entity decreasing and another group entitys newly acquired shareholding increasing (this would trigger the application of the value shifting rules). However, commercially, the market value of the ultimate holding companys combined direct and indirect interests in all the subsidiary companies remains unchanged. It is proposed that the definition of value shifting arrangement be amended to exclude certain corporate rollover transactions between groups of companies or where the value of the effective interest of the connected person remains unchanged.   Reviewing the prohibition against transfers of Read More …

Reviewing the connected person definition in relation to partnerships Paragraph (c) of the definition of connected person in section 1 of the Income Tax Act provides that, in the context of a partnership or foreign partnership (as defined in section 1), each member of the partnership is a connected person in relation to any other member of the partnership and any connected person in relation to any member of such partnership or foreign partnership. Therefore, partners are connected to each other as well as to all connected persons of the partners in the partnership. It has come to governments attention that limited partners in an en commandite partnership (a partnership carried out in the name of only some of the partners; the undisclosed partners contribute a fixed sum and are not liable for more than their capital contribution in the case of a loss) are affected by the wide ambit Read More …

Curbing the abuse of the employment tax incentive scheme Changes were made to the Employment Tax Incentive Act (2013) in 2021 and 2023 to curb abuse of the employment tax incentive from aggressive tax schemes, which used training institutions to claim the incentive for students. It is proposed that punitive measures to support those amendments be refined in the legislation to address the abusive behaviour of certain taxpayers towards the incentive. Amending the definition of remuneration proxy in section 1 In 2013, the definition of remuneration factor in the Seventh Schedule to the Income Tax Act (1962) was replaced by a new definition of remuneration proxy in section 1. The new definition of remuneration proxy refers to an associated institution in relation to the employer without referencing paragraph 1 of the Seventh Schedule, where this term is defined. It is proposed that the definition of remuneration proxy be amended to Read More …

Finance Minister Enoch Godongwana has proposed an increase on excise duties on alcoholic beverages by between 6.7 and 7.2% for 2024/25. Treasury stated in its 2024 Budget Review that the guideline excise tax burdens for wine, beer and spirits are 11%, 23% and 36% respectively of the weighted average retail price. So what does this mean? A can of beer will increase by 14 cents A can of cider and alcoholic fruit beverages will go up by 14 cents A bottle of wine will go up by 28 cents A bottle of fortified wine will go up by 47 cents A bottle of sparkling wine will cost an extra 89 cents and lastly A bottle of spirits, including whiskey, gin or vodka will increase by R5.53 Godongwana has noted that excise duties have increased more than inflation in the last few years and this has resulted in a higher tax Read More …

On this page you will see Individuals’ tax table, as well as the Tax Rebates and Tax Thresholds – scroll down. 2025 tax year (1 March 2024 to 28 February 2025) ​Taxable income (R) ​Rates of tax (R) 1 – 237 100 18% of taxable income 237 101 – 370 500 42 678 + 26% of taxable income above 237 100 370 501 – 512 800 77 362 + 31% of taxable income above 370 500 512 801 – 673 000 121 475 + 36% of taxable income above 512 800 673 001 – 857 900 179 147 + 39% of taxable income above 673 000 857 901 – 1 817 000 251 258 + 41% of taxable income above 857 900 1 817 001 and above 644 489 + 45% of taxable income above 1 817 000 Tax Rebates 21 February 2024 Budget Speech No changes from last year Read More …