The 2016/17 Budget announced a concerted drive to target offshore funds and thereby broaden a tax base that is struggling to keep up. “This is not surprising as some companies and wealthy individuals have been making requests about regularising their affairs ahead of the new OECD global standard for the automatic exchange of financial information between tax authorities coming into effect from 2017,” says tax director at Cliffe Dekker Hofmeyr, Ruaan Van Eeden. The proposal is to provide voluntary disclosure relief in respect of tax and exchange control for a period of six months, from 1 October 2016, to allow non-compliant individuals and companies to disclose assets held and income earned offshore. Trusts have been specifically excluded from the voluntary disclosure process.
Tax News
Proposed amendment to the date on which the estimate for the second provisional tax payment must be submitted
By way of background, provisional tax is not a separate tax payable by certain persons, instead it is merely a method used to collect normal tax that will ultimately be payable for the year of assessment concerned, during the year. Otherwise stated, provisional tax is an advance payment of a taxpayer’s normal tax liability. A provisional taxpayer is generally required to make two provisional tax payments, six months into the year of assessment and at the end of the year of assessment, but has the option to make a third top-up payment after the end of the year of assessment. Provisional tax payments are calculated on estimated taxable income (which includes taxable capital gains) for the particular year of assessment.
2016 South African budget speech summary | tax proposals
overview The Honourable Minister of Finance read the 2016 South African budget speech on 24 February 2016. In this summary, we address only the revenue (i.e. tax) side of the budget proposals. As this budget speech has received an unusual amount of interest, we have set out the tax proposals in more detail than usual, although this summary is not intended to be comprehensive.
It’s called 9/12 – Gordhan remembers Nene
Cape Town – The Budget Speech might have been a tad boring without any red-bereted comedy, but what was lacking in humour in Parliament was made up for behind the scenes during the pre-budget press conference on Wednesday. Finance Minister Pravin Gordhan revelled in the knowledge that the room of over 120 journalists was there to hear how he would save South Africa from a ratings downgrade and change the economic course of the country. “Thank you for welcoming the new old guy in such numbers,” Gordhan told the journalists. “Thank you for your support.” Once his opening remarks were complete, Gordhan was ready to pounce with humour and wit to retort to the challenging questions posed by journalists.
Budget 2016/17 – Budget in a nutshell
Cape Town – 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.
Budget 2016/17 – No big tax surprises
Cape Town – Finance Minister Pravin Gordhan delivered a surprise during Wednesday afternoon’s National Budget presentation in Parliament by not hiking the personal income tax rate. Tax rates for companies and VAT were not increased either. However, as part of fiscal measures to narrow the budget deficit and stabilise debt growth government proposes to raise an additional R18.1bn in revenue in R2016/17. This will mainly be achieved by upward adjustments to capital gains tax (the effective rate raised from 13.7% to 16.4% for individuals), transfer duty (11% to 13% on property sales above R10m) and increases in excise duties, the general fuel levy (30 cents per litre) and environmental taxes. Although limited fiscal drag relief of R5.5bn in personal income tax will be given, the government will still raise an additional R7.6bn from individuals. This will be done by partially increasing marginal personal income tax brackets and rebates for inflation.
South African Budget 2016/17 – 2016 BUDGET HIGHLIGHTS
• Personal income tax relief of R5.65 billion • Capital gains tax inclusion rate for individuals, special trusts and insurers’ individual policyholder funds increases from 33.3% to 40%, and for other taxpayers from 66.6% to 80% • Assets transferred through a loan to a trust are to be included in the estate of the founder at death and interest-free loans to trusts are to be treated as donations • General fuel levy increases by 30 cents per litre on 6 April 2016 • Excise duties on alcoholic beverages increase by between 6.7% and 8.5% • From 1 April 2016 the plastic bag levy is to increase from 6 cents to 8 cents per bag and the incandescent globe tax will Increase from R4 to R6 per globe • A tyre levy at R2.30 per kilogram is to be introduced on 1 October 2016 and a tax on sugar-sweetened beverages on Read More …
Budget 2016/17 – South Africa Tax Guide 2016/17 & 2016 Budget Speech
Fellow South Africans I have the honour to present the 2016 Budget of President Zuma’s second administration. We do so in a spirit of frankness, both about our challenges and the opportunity to turn our economy’s direction towards hope, confidence and a better future for all. Low growth, high unemployment, extreme inequality and hurtful fractures in our society – these are unacceptable to all of us. I have a simple message. We are strong enough, resilient enough and creative enough to manage and overcome our economic challenges……….. Full Speech (download below) 2016 Budget Speech 2016 Budget Tax Rates guide Errata to Budget Documents 2016
Tax revolt may worsen if Gordhan targets Personal Income Tax to fill gaps
Author: Jaco Leuvennink (News24). Cape Town – When the government is looking for extra money, all signs point to personal income tax (PIT) because increasing VAT and Company Tax have political and investment implications that’s currently difficult to counter, says a tax expert that spent 14 years of his career developing tax legislation, especially closing loopholes, at the National Treasury. Professor Keith Engel, an American with South African citizenship and currently chief executive of the South African Institute of Tax Practitioners (SAIT), said in an interview on a radio station (FM Classic) that higher income earners will be targeted. “Because the super rich is usually more tolerant… (and) able to withstand tax hikes, the middle income earners may suffer the most. In an election year and with the rating agencies on our back, alternatives look highly unlikely.”
Taxpayers will feel brunt of Gordhan’s whip
Author: Liesl Peyper (News24). Cape Town – This afternoon Finance Minister Pravin Gordhan will arguably give the most significant speech of his political career when he delivers the 2016/17 budget in Parliament. Economically speaking, the odds are against South Africa with record low growth rates, the worst drought in history, and an unsustainable debt to GDP ratio, to name but a few.