Summary Tax Guide for 2013/2014

TAX GUIDE – 2013/2014

Individuals and trusts

Income tax rates for natural persons and special trusts

Year of assessment ending 28 February 2014

Taxable   income Taxable   rates
0 – 165 600 18% of each R1
165 601 – 258   750 29 808 + 25% of   the amount above 165 600
258 751 – 358 110 53 096 + 30% of the amount above 258 750
358 111 – 500   940 82   904 + 35% of the amount above 358 110
500 941 – 638   600 132   894 + 38% of the amount above 500 940
638 601 and   above 185   205 + 40% of the amount above 638 600

 

Natural persons

Tax thresholds

2013

2014

R

R

Below 65 years of age

63 556

67 111

Aged 65 and below 75

99 056

104 611

Aged    75 and over

110 889

117 111

 

Tax rebates

2014

R

Primary – all natural persons

12 080

Secondary – persons aged 65 and older

6 750

Secondary – persons aged 75 and above

2 250

 

Trusts

The tax rate on trusts (other than special trusts which are taxed at rates applicable to individuals) remains unchanged at 40%.

 PROVISIONAL TAX

A provisional taxpayer is any person who earns income other than remuneration or an allowance or advance payable by the person’s principal. The following individuals are exempt from the payment of provisional tax–

  • Individuals below the age of 65 who do not carry on a business and whose taxable income –
    • will not exceed the tax threshold for the tax year; or
    • from interest, foreign dividends and rental will be R20 000 or less for the tax year.
  • Individuals age 65 and older if their taxable income for the tax year –
    • consists exclusively of remuneration, interest, foreign dividends or rent from the letting of fixed property; and
    • is R120 000 or less.

Retirement fund lump sum withdrawal benefits 

Taxable income

Rate of tax

R

R

0 – 22 500 0% of taxable income
22 501 – 600 000 18% of taxable income above  22 500
600 001 – 900 000 103 950 + 27% of taxable income above  600 000
900 001 and above 184 950 + 36% of taxable income above  900 000

 

Retirement fund lump sum withdrawal benefits consist of lump sums from a pension, pension preservation, provident, provident preservation or retirement annuity fund on withdrawal (including assignment in terms of a divorce order).

Tax on a specific retirement fund lump sum withdrawal benefit (X) is equal to –

  • tax determined by applying the tax table to the aggregate of that lump sum X plus all other retirement fund lump sum withdrawal benefits accruing from March 2009, all retirement fund lump sum benefits accruing from October 2007 and all severance benefits accruing from March 2011; less
  • tax determined by applying the tax table to the aggregate of all retirement fund lump sum withdrawal benefits accruing before lump sum X from March 2009, all retirement fund lump sum benefits accruing from October 2007 and all severance benefits accruing from March 2011.

 

Retirement fund lump sum benefits 

Taxable income

Rate of tax

R

R

0 – 315 000 0% of taxable income
315 001 – 630 000 18% of taxable income above  315 000
630 001 – 945 000 56 700 + 27% of taxable income above  630 000
945 001 and above 141 750 + 36% of taxable income above  945 000

Retirement fund lump sum benefits consist of lump sums from a pension, pension preservation, provident, provident preservation or retirement annuity fund on death, retirement or termination of employment due to redundancy or termination of employer’s trade.

Severance benefits consist of lump sums from or by arrangement with an employer due to relinquishment, termination, loss, repudiation, cancellation or variation of a person’s office or employment.

Tax on a specific retirement fund lump sum benefit or a severance benefit (Y) is equal to –

  • tax determined by applying the tax table to the aggregate of that lump sum or severance benefit Y plus all other retirement fund lump sum benefits accruing from October 2007 and all retirement fund lump sum withdrawal benefits accruing from March 2009 and all other severance benefits accruing from March 2011; less
  • tax determined by applying the tax table to the aggregate of all retirement fund lump sum benefits accruing before lump sum Y from October 2007 and all retirement fund lump sum withdrawal benefits accruing from March 2009 and all severance benefits accruing before severance benefit Y from March 2011.

Foreign Dividends

Most foreign dividends received by individuals from foreign companies (shareholding of less than 10 per cent in the foreign company) are taxable at a maximum effective rate of 15 per cent. No deductions are allowed for expenditure to produce foreign dividends.

 

Exemptions

Interest and dividends  

  • Interest from a South African source earned by any natural person less than 65 years of age, up to R23 800 per annum, and persons 65 and older, up to R34 500 per annum, is exempt from taxation.
  • Interest is exempt where earned by non-residents who are physically absent from South Africa for at least 183 days during the 12 month period before the interest accrues or is paid and who are not carrying on business in South Africa through a fixed place of business.

 

Deductions

 Current pension fund contributions

The deduction is limited to the greater of

  • 7,5% of remuneration from retirement funding employment, or
  • R1 750.

Any excess may not be carried forward to the following year of assessment.

Arrear pension fund contributions

The deduction is limited to a maximum of R1 800 per annum. Any excess over R1 800 may be carried forward to the following year of assessment.

Current retirement annuity fund contributions

The deduction is limited to the greater of

  • 15% of taxable income other than from retirement funding employment, or
  • R3 500 less current deductions to a pension fund, or
  • R1 750

Any excess may be carried forward to the following year of assessment.

Arrear retirement annuity fund contributions

The deduction is limited to a maximum of R1 800 per annum. Any excess over R1 800 may be carried forward to the following year of assessment.

 

Medical and disability expenses 

  • Taxpayers 65 and older may claim all qualifying expenditure.  The rebate will apply only from 1 March 2014.
  • Taxpayers under 65, where the taxpayer or the taxpayer’s spouse or child is a person with a disability may in determining tax payable deduct monthly contributions to medical schemes (a tax rebate to be known as a medical scheme fees tax credit) up to R242 for each of the taxpayer and the first dependant on the medical scheme and R162 for each additional dependant. When determining taxable income they can also claim a deduction for medical scheme contributions exceeding four times the amount of the medical schemes fees tax credits and claim all qualifying medical expenses (which excludes medical scheme contributions).
  • Other taxpayers under 65 may in determining tax payable deduct monthly contributions to medical schemes (a tax rebate to be known as a medical scheme fees tax credit) up to R242 for each of the taxpayer and the first dependant on the medical scheme and R162 for each additional dependant. When determining taxable income they can also claim a deduction for the aggregate of medical scheme contributions exceeding four times the amount of the medical schemes fees tax credits and any other medical expenses, limited to the amount which exceeds 7,5% of taxable income (excluding retirement fund lump sums).

Donations 

Deductions in respect of donations to certain public benefit organisations are limited to 10% of taxable income before deducting medical expenses (excluding retirement fund lump sums).

Allowances

Subsistence allowances and advances

Where recipients are obliged to spend at least one night away from their usual place of residence on business and the accommodation to which that allowance or advance relates is in the Republic and the allowance or advance is granted to pay for –

  • meals and incidental costs, an amount of R319 per day is deemed to have been expended;
  • incidental costs only, an amount of R98 for each day which falls within the period is deemed to have been expended

Where the accommodation to which that allowance or advance relates is outside the Republic, a specific amount per country is deemed to have been expended.

Details of these amounts are published on the SARS website under Legal & Policy / Legislation / Regulations and Government Notices / Income Tax Act, 1962.

 

Travelling allowance

Rates per kilometre which may be used in determining the allowable deduction for business-travel, where no records of actual costs are kept are determined by using the following table.

Value of the   vehicle

(including VAT)  

Fixed cost

Fuel cost

Maintenance

cost

R

R per annum

c per km

c per km

0 – 60 000 19 310

81.4

26.2

60 001 – 120 000 38 333

86.1

29.5

120 001 – 180 000 52 033

90.8

32.8

180 001 – 240 000 65 667

98.7

39.4

240 001 – 300 000 78 192

113.6

46.3

300 001 – 360 000 90 668

130.3

54.4

360 001 – 420 000 104 374

134.7

67.7

420 001 – 480 000 118 078

147.7

70.5

exceeding 480 000 118 078

147.7

70.5

 

Note:

Note: 80% of the travelling allowance must be included in the employee’s remuneration for the purposes of calculating PAYE. The percentage is reduced to 20% if the employer is satisfied that at least 80% of the use of the motor vehicle for the tax year will be for business purposes.

No fuel cost may be claimed if the employee has not borne the full cost of fuel used in the vehicle and no maintenance cost may be claimed if the employee has not borne the full cost of maintaining the vehicle (e.g. if the vehicle is the subject of a maintenance plan).

The fixed cost must be reduced on a pro-rata basis if the vehicle is used for business purposes for less than a full year.

The actual distance travelled during a tax year and the distance travelled for business purposes substantiated by a log book are used to determine the costs which may be claimed against a travelling allowance.

Alternatively: 

  • Where the distance travelled for business purposes does not exceed 8 000 kilometres per annum, no tax is payable on an allowance paid by an employer to an employee up to the rate of 324 cents per kilometre, regardless of the value of the vehicle.
  • This alternative is not available if other compensation in the form of an allowance or reimbursement is received from the employer in respect of the vehicle.

Fringe Benefits 

Employer-owned vehicles 

  • The taxable value is 3,5% of the determined value (the cash cost including VAT) per month of each vehicle. Where the vehicle is–
    • the subject of a maintenance plan when the employer acquired the vehicle the taxable value is 3,25% of the determined value; or
    • acquired by the employer under an operating lease the taxable value is cost incurred by the employer under the operating lease plus the cost of fuel.
  • 80% of the fringe benefit must be included in the employee’s remuneration for the purposes of calculating PAYE. The percentage is reduced to 20% if the employer is satisfied that at least 80% of the use of the motor vehicle for the tax year will be for business purposes.
  • On assessment the fringe benefit for the tax year is reduced by the ratio of the distance travelled for business purposes substantiated by a log book divided by the actual distance travelled during the tax year.
  • On assessment further relief is available for the cost of license, insurance, maintenance and fuel for private travel if the full cost thereof has been borne by the employee and if the distance travelled for private purposes is substantiated by a log book.

Interest-free or low-interest loans

The difference between interest charged at the official rate and the actual amount of interest charged, is to be included in gross income.

Residential accommodation

The fringe benefit to be included in gross income is the greater of the benefit calculated by applying a prescribed formula or the cost to the employer.

The formula will apply if the accommodation is owned by the employer, by an associated institution in relation to the employer, or under certain limited circumstances where it is not owned by the employer.

 

DIVIDENDS TAX

Dividends tax is imposed at 15% on dividends paid by resident companies and by non-resident companies in respect of shares listed on the JSE. Dividends are tax exempt if the beneficial owner of the dividend is a South African company, retirement fund or other exempt person.

The tax is to be withheld by companies paying the taxable dividends or by regulated intermediaries in the case of dividends on listed shares.

CORPORATE INCOME TAX RATES

YEARS OF ASSESSMENT ENDING BETWEEN

1 APRIL 2013 AND 31 MARCH 2014

Normal tax

 
Companies and close corporations Basic rate 28%
Personal service provider companies Basic rate 28%
Foreign resident companies which earn   income from a SA source Basic rate 28%

SMALL BUSINESS CORPORATIONS

YEARS OF ASSESSMENT ENDING BETWEEN

1 APRIL 2013 AND 31 MARCH 2014

Taxable income

Rate of tax

R

R

0   – 67 111 0%   of taxable income
67   112 – 365 000 7%   of taxable income above  67 111
365   001 – 550 000 20   852 + 21% of taxable income above  365   000
550   001 and above 59   702 + 28% of taxable income above  550   000

                 

TURNOVER TAX FOR MICRO BUSINESSES

YEARS OF ASSESSMENT ENDING BETWEEN

1 APRIL 2013   AND 31 MARCH 2014

Taxable turnover

Rate   of tax

R

R

0 – 150 000 0% of taxable turnover
150 001 – 300 000 1% of taxable turnover above  150 000
300 001 – 500 000 1 500 + 2% of taxable turnover above  300 000
500 001 – 750 000 5 500 + 4% of taxable turnover above  500 000
750 001 and above 15 500 + 6% of taxable turnover above  750 000

EFFECTIVE CAPITAL GAINS TAX (CGT) RATES

Capital gains on the disposal of assets are included in taxable income.

 Maximum effective rates of tax

Individuals and special trusts 13.3%

Companies 18.6%

Other trusts 26.6%

Events that trigger a disposal include a sale, donation, exchange, loss, death and emigration.

The following are some of the specific exclusions:

  • A gain/loss of R2 million on the disposal of a primary residence
  • Most personal use assets
  • Retirement benefits
  • Payments in respect of original long-term insurance policies
  • Annual exclusion of R30 000 capital gain or capital loss is granted to individuals and special trusts
  • Small business exclusion of capital gains for individuals (at least 55 years of age) of R1.8 million when a small business with a market value not exceeding R10 million is disposed of
  • Instead of the annual exclusion, the exclusion granted to individuals is R300 000 for the year of death.

 

OTHER TAXES, DUTIES AND LEVIES

 Value-added Tax (VAT)

VAT is levied at the standard rate of 14% on the supply of goods and services by registered vendors.

A vendor making taxable supplies of more than R1 million per annum must register for VAT and a vendor making taxable supplies of more than R50 000 but not more than R1 million per annum may apply for voluntary registration. Certain supplies are subject to a zero rate or are exempt from VAT.

 

Transfer duty

Acquisitions of property by all persons, which are not subject to VAT, are subject to transfer duty at the following rates: 

Value of property Rate

R

0 – 600 000 0%
600 001 – 1 000 000 3% of the value above  600 000
1 000 001 – 1 500 000 12 000 + 5% of the value above  1 000 000
1 500 001 and above 37 000 + 8% of the value above  1 500 000

Estate duty

Estate duty is levied at a flat rate of 20% on property of residents and South African property of non-residents.

A basic deduction of R3.5 million is allowed in the determination of an estate’s liability for estate duty as well as deductions for liabilities, bequests to public benefit organisations and property accruing to surviving spouses.

Donations tax 

  • Donations tax is levied at a flat rate of 20% on the value of property donated.
  • The first R100 000 of property donated in each year by a natural person is exempt from donations tax.
  • In the case of a taxpayer who is not a natural person, the exempt donations are limited to casual gifts not exceeding R10 000 per annum in total.
  • Dispositions between spouses and donations to certain public benefit organisations are exempt from donations tax.

Securities transfer tax 

The tax is imposed at a rate of 0.25 of a per cent on the transfer of listed or unlisted securities. Securities consist of shares in companies or member’s interests in close corporations.

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