The key highlights of how the 2015 budget speech affects you and your business
According to Nene:
1. Personal income tax will rise
Personal income tax rates will rise by one percentage point (1%) for all taxpayers who earn more than R181 900 a year. This raises tax by R21 a month for a taxpayer below age 65 with an annual income of R200 000. Those who earn R500 000 will pay R271 a month more. And those who earn R1.5 million a year will get a tax increase of R1 105 a month.
This means you must adjust how you deduct employees' tax on your payroll.
2. There will be an adjustment in tax brackets
Just like in previous years, there will be an adjustment in tax brackets, rebates and medical scheme contribution credits for inflation.
This means those who earn below about R450 000 a year will get a tax relief, while those with higher incomes will pay more in tax.
3. Small businesses with a turnover below R1 million a year will get tax relief
Following recommendations by the Davis Committee
, it's been proposed that businesses with a turnover below R1 million a year will get a more generous tax structure.
This means, qualifying businesses with a turnover below R335 000 a year won't pay tax. The maximum rate now drops from 6% to 3%. To complement this relief, SARS will form a small business desk in its revenue offices to help businesses comply with these requirements.
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4. Tax measures to promote energy efficiency are on the way
The minister put on the table a number of tax measures to promote energy efficiency.
The first proposal is a temporary increase in the electricity levy (from 3.5c/kWh to 5.5c/kWh) to help in demand management. This is a temporary measure and will be replaced by a carbon tax in 2016.)
The second proposal is that the energy-efficiency savings incentive will increase from 45c/kWh to 95c/kWh.
The minister says he'll expand on these proposals after discussions with industry, the electricity regulator, Eskom and other interested parties.
6. A carbon tax will come into place in 2016
A draft Carbon Tax Bill will come into place later this year for a further round of public consultation. This will lead to an introduction of a carbon tax in 2016 to deal with the energy crisis.
7. Fuel taxes will rise
There will be:
An increase in the general fuel levy of 30.5c per litre.
An increase in the Road Accident Fund (RAF) levy of 50c per litre.
An overall increase in the fuel levy of 80.5c.
This means, overall tax on fuel is approximately 41%.
If your employees use company cars, you'll pay more in fuel, so budget wisely.
8. Tax evaders will get caught
The minister added that SARS and the Reserve Bank will work together to stop tax evasion.
'We are also taking further steps to combat financial leakages which deprive our economy of billions of rand through erosion of the tax base, profit shifting and illicit money flows,' said Nene.
Now that you know how the 2015 budget speech
affects you, comply. If you have questions about the budget, send them to our experts at the Accounting and Tax Club.