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A summary of the South Africa Budget Speech 2013-2014 by Minister Pravin Gordhan, the highlights and how it's going to affect you.
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What does Uncle Pravin have in store for us –Budget 2013
By Kevin Yeh, CFP®Daberistic Financial Services
Creating Financial Security, Prosperity and Wealth
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Contents
• Uncle Pravin’s speech highlights• Uncle Pravin wants your money – Individual
Taxes• Uncle Pravin encourage you to start small
businesses• What Uncle Pravin wants you to do
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Daberistic Financial Services
• Authorised financial services provider, FSP # 25477
• “One-stop shop” offering– Life insurance– Medical aid– Investments– Car and household insurance– Business insurance
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Uncle Pravin
Courtesy: fin24
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What do people say about our uncle’s speech
Tax relief
surprise
Gordhan did his best
Walking the tight rope
Failed to reduce inflated
public wages
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Pravin’s budget highlight
1. In line with the National Development Plan2. R7bn tax relief for individual tax payers3. Budget deficit at 4.6% in 2013/144. Economic growth 2.7% in 20135. Inflation stable at 5.7% in 20136. Net loan debt 38.6% of GDP in 2013/14
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Pravin’s budget highlight
Revenue Spending0
200
400
600
800
1,000
1,200
985.71149.4
Budget 2013/14 (in R bn)
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Pravin’s budget highlight
8. Personal tax threshold R67,111 (R63,556)9. Sin taxes go up between 5% and 10%10. Fuel levy up 23c11. Levy on plastic shopping bags up to 6c12. Social grants up by 4% ~ 5%13. Medical aid credit R242 first two/R162
additional14. Consider making transfer to preservation fund
compulsory when changing employer
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Pravin’s budget highlight
15.Youth employment incentive to be tabled16.Upgrade infrastructure: R827bn17.Moderate employment growth18.Spending cuts of R10.4bn next 3 years19.Tax relief for small businesses20.Special economic zone – 15% corporate tax21.Review of mining tax22.Encourage investments and trades with Africa
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Pravin’s budget highlight
15.Youth employment incentive to be tabled16.Upgrade infrastructure: R827bn17.Moderate employment growth18.Spending cuts of R10.4bn next 3 years19.Tax relief for small businesses20.Special economic zone – 15% corporate tax21.Review of mining tax22.Encourage investments and trades with Africa
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Individual Taxes
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Individual taxes – younger than 65
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Personal income tax rateTaxable Income (R) Rates of tax
R0 – R165,600 18%R165,601 – R258,750 25%R258,751 – R358,110 30%R358,111 – R500,940 35%R500,941 – R638,600 38%R638,601 + 40%
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Individual taxesRebatesPrimary (Under age 65) R12,080Secondary (65 – 75) R6,750Tertiary (age 75 and over) R2,250
Tax thresholdBelow age 65 R67,111Age 65 – 75 R104,611Age 75 and over R117,111
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Individual taxes
• Interest and dividend income– Annual exemption on interest R23,800 (age <65)
and R34,500 (age 65+)• Medical aid tax credit
– R242 (R230) for first 2– R162 (R154) for each additional
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Individual taxes
• Retirement fund lump sum withdrawal benefits – no change
Taxable income (R) Rate of Tax0 – 22,500 0%22,501 – 600,000 18%600,001 – 900,000 27%900,001 + 36%
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Individual taxes
• Retirement fund lump sum benefits or severance benefits – no change
Taxable income (R) Rate of Tax0 – 315,000 0%315,001 – 630,000 18%630,001 – 945,000 27%945,001 + 36%
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Retirement fund reforms
• From March 2014:– Employer contributions as taxable fringe benefits
in the hands of the employee– Individuals allowed 27.5% of the higher of taxable
income or employment income as deduction, for contributions to pension, provident and retirement annuity funds
– Maximum annual deduction R350,000– Tax-preferred savings and investment accounts in
2015
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Retirement fund reforms
• From March 2014:– Retirement funds must identify appropriate
preservation funds for exiting members– Must guide members of converting savings into a
regular income after retirement– More competition promoted to sell living
annuities– Tax treatment of pension, provident and
retirement annuity funds simplified and harmonised
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Retirement fund reforms
• From March 2014:– Vested benefits protected
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Small business tax relief
• Turnover threshold R20m (R14m)
Taxable income (R) Rate of tax0 – 67,111 0%67,112 – 365,000 7%365,000 – 550,000 21%550,000 + 28%
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Where the budget money comes from
34%
3%
19%5%
27%
5%7%
Source
Personal Income TaxExcise DutiesCorporate TaxCustomsVATFuelOther
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What does Uncle Pravin want you to do
• Pay your dues on time• Preserve your retirement
savings• Save money• Start businesses to create jobs
and grow the economy
