The Budget Speech and its implications for our income tax forms for the year ahead
Written by Deon Claase
Jean-Baptiste Colbert said, “The art of taxation consists in so plucking the goose as to obtain the largest amount of feathers with the lease amount of hissing”. To assist us on this difficult topic, Deon Claase, a lecturer in the School of Financial Planning and Insurance, sheds some light on the recently delivered Budget Speech and the implications for our income tax forms for the year ahead.
Finance Minister Tito Mboweni delivered the Budget Speech on Wednesday, 24 February 2021. Against the backdrop of the COVID-19 pandemic, the Budget was more optimistic than expected, with tax increases to a minimum, and there were no big changes in matters impacting on the financial planning industry. Ensuring access to COVID-19 vaccines is the government’s immediate priority. Access to vaccinations will be provided free of charge, with funding for the vaccine procurement and roll-out being drawn from the national budget.
South Africans can look forward to lower taxes, with some personal income tax relief. The corporate income tax rate will also be reduced in the near future, with the aim of helping businesses grow.
According to the Budget 2021/22 Tax Guide, the main tax proposals for 2021/22 are:
- To support economic recovery, government will not raise any additional tax revenue in this budget.
- The personal income tax brackets and rebates will increase above the inflation rate of 4 per cent.
- Government will increase excise duties on alcohol and tobacco by 8 per cent for 2021/22.
- Inflation-related increases of 15c/litre and 11c/litre will be implemented for the general fuel levy and the RAF levy, respectively, with effect from 7 April 2021.
- The UIF contribution ceiling will be set at R17 711.58 per month from 1 March 2021.
Individuals and special trusts
An above-inflation increase has been made to the personal income tax brackets. The personal income tax rates for the 2021/2022 tax year are shown below.
|Taxable income||Rate of Tax – 2021/2022 tax year|
|R0 – R216 200||18% of taxable income|
|R216 201 – R337 800||R38 916 + 26% of taxable income above R216 200|
|R337 801 – R467 500||R70 532 + 31% of taxable income above R337 800|
|R467 501 – R613 600||R110 739 + 36% of taxable income above R467 500|
|R613 601 – R782 200||R163 335 + 39% of taxable income above R613 600|
|R782 201 – R1 656 600||R229 089 + 41% of taxable income above R782 200|
|R1 656 601 and above||R587 593 + 45% of taxable income above R1 656 600|
Similarly, there has been an above-inflation increase to the tax-free thresholds for personal income taxes to the following:
|Below age 65||R 83 100||R 87 300|
|Age 65 to below 75||R 128 650||R135 150|
|Age 75 and over||R 143 850||R151 100|
The primary, secondary and tertiary rebates (deductible from tax payable) were increased to the following:
|Rebates (individuals only)||2020/2021||2021/2022|
|Primary rebate||R14 958||R 15 714|
Secondary rebate(applicable only to taxpayers aged 65 and older)
|R 8 199||R 8 613|
Tertiary rebate(applicable only to taxpayers aged 75 and older)
|R 2 736||R 2 871|
Medical tax credits
Monthly tax credits for medical scheme contributions were increased to the following:
R332 per month per beneficiary for the first two beneficiaries
R224 per month for each additional beneficiary.
All in all, a budget speech that ensures South Africa is on the right track for the 2021/2022 tax year, and that there will not be much hissing during the process of plucking feathers, and we will be keeping our golden egg, for now…
National Treasury. 2021. Documents – National Budget – 2021. [Online] Available from: http://www.treasury.gov.za/documents/national%20budget/2021/ (Accessed: 24/02/2021).
12 Mar 2021