Important tax proposals to note:
1. Employment Tax Incentive: Government proposes to maintain the current value of the employment tax incentive. However, effective from 1 April 2025, the formula to calculate the incentive and the eligible income bands will be adjusted, in part due to adjustments of minimum wages since the last increase in the value of the incentive in 2022.
2. Cross-border tax treatment of retirement funds: The current treatment of cross-border retirement funds may have resulted in double non-taxation, particularly where South Africa is granted the taxing right by treaty. It is proposed that changes be made to the rules that currently exempt lump sums, pensions and annuities received by South African residents from foreign retirement funds for previous employment outside South Africa, with amendments in the current legislative cycle.
3. Government aims to expand South Africas tax treaty network and renegotiate some existing treaties to strengthen economic and trade relations, prevent double taxation and tax abuse, and enhance regional cooperation.
4. VAT Treatment of Temporary Letting of Residential Property: The VAT consequences of temporary letting by developers will be reviewed.
5. Audit Certificate to be Issued by Public Benefit Organisations: Clarity will be provided in respect of audit certificates to be issued for PBOs to ensure the validity of section 18A certificates.
6. Understatement Penalties – Bona fide inadvertent error: Consideration will be given to explicitly linking the term bona fide inadvertent error to the definition of substantial understatement.
7. Transfer Duty Increase: The thresholds for Transfer Duty are adjusted by 10% for inflation.
8. Extension of the Urban Development Zone Incentive: The incentive is extended by five years to 31 March 2030 to address urban decay within inner cities.
9. Individual Assessed Losses Extension of Ring-fencing: The current rules only apply to taxpayers at the maximum marginal rate. The threshold at which these rules apply will be reviewed.
10. Simplification of Diesel Refund Process: As from 1 April 2026, the administration process of the diesel refund system will be simplified