6 things you need to know about South Africa’s new tax laws
President Zuma has signed off on three new Tax Amendment Acts introducing several big new changes for South African taxpayers.
The Taxation Laws Amendment Bill; the Tax Administration Laws Amendment Bill; and the Rates and Monetary Amounts and Amendment of Revenue Laws Bill were primarily introduced to amend major issues with current South African tax law as well as provide new incentives to current taxpayers.
The six biggest changes are detailed below.
Expect to pay more on Capital Gains Tax
As defined by the SARS handbook, Capital gains refers to any proceeds received after the disposal of an asset on or after 1 October 2001.
This includes any proceeds received after the sale of an asset, donation of an asset, death, cessation of residence, and the loss or destruction of an asset.
This will continue to form part of the current Income Tax which, as a result, could see a slight rise. These are the changes to the capital gains taxes for 2017.
Individuals and Special Trusts
Watch out for ‘Stealthy Taxation’
The question of whether all national taxes should be adjusted to prevent “inflation erosion” was addressed in the Rates and Monetary Amounts and Amendment of Revenue Laws Amendment Act.
Unlike the personal income tax tables – which are adjusted each year – the tax brackets for other tax tables (like the retirement fund lump) were last adjusted in 2014. The Act dismisses this, stating that certain tax thresholds are set at a specific level for administrative reasons and do not require regular adjustments.
This has come under scrutiny by analysts, who consider not adjusting these values to be “increasing taxation through stealth”.
Disclose your overseas assets
The Rates and Monetary Amounts and Amendment of Revenue Laws Amendment Act has provided a six month “grace period” to allow South African citizens to disclose previously undisclosed overseas assets.
This special voluntary disclosure programme will run from 1 October 2016 to 31 March 2017 with a waiver of all penalties (including criminal charges), provided the application is successful.
Tax deductions for businesses
New amendments to the Taxation Laws Amendment Bill, introduced changes on tax deductions available to businesses.
With regard to a person without disability, the value of the deduction is increased from R30,000 to R40,000 for qualifications from NQF (National Qualifications Framework) level 1 to NQF level 6 and decreased from R30,000 to R20,000 for qualifications from NQF level 7 to NQF level 10.
With regard to person with disability, the value of the deduction is increased from R500,000 to R600,000 for qualifications from NQF level 1 to NQF level 6 and remains at R50,000 for qualifications from NQF level 7 to NQF level 10.
A cap of R20 million was also introduced on the claim allowed to each employer.
Loss of privacy
A new international Common Reporting Standard (CRS) will allow governments to obtain detailed account information from their financial institutions and exchange that information automatically with other jurisdictions on an annual basis from September 2017.
Expect to pay more for your car’s tyres
The Rates and Monetary Amounts and Amendment of Revenue Laws Amendment Act has introduced a new tyre levy at a rate of R2.30/kg of tyre.
This new tax replaces current agreements between tyre distributors and manufacturers meaning tyre prices are expected to rise slightly so that the new mandatory tax doesn’t cut into profits.