HoofartikelsSake

Budget 2018 Highlights and Lowlights

Budget 2018: VAT up to 15%, tax increase by stealth (thanks to bracket creep), wealth taxes expanded (estate and donations tax)

Background:
R48Bn shortfall, free tertiary education put even more strain on the budget (another R20Bn pa) but the deficit is expected to narrow further (but will depend on a better economy) – GDP revised ‘upward’ to 1% this year, growing to a (less than stellar) 2.5% in 2020. This is very worrisome. Subsaharan GDP is expected to increase 3.5% this year. This is going to be funded by the middle and wealthier classes.

 

 

 

 

 

In case you missed it – we’re the golden goose, and the only way to get around that is to be an entrepreneur.

This is where it is going to:

 

 

 

 

 

(and an additional amount for Smiley Gigaba’s Candy Crush Rehab project).

Personal Income tax: Below inflation rate, this leads to ‘bracket creep’ which means that in real terms your take-home pay is going to be less – and give SARS an additional R6.9Bn in tax

 

 

 

 

 

 

 

 

 

 

Corporate Tax: Remains the same (because it’s already non-competitive globally)
Capital Gains Tax: No change R40,000 annual allowance (i.e decrease in real terms)
Estate Duty – increased to 25% over R30m (ditto with donations tax, these always go hand in hand)
VAT: Increased to 15% on 1/4/2018. Social grants increased at more than inflation to compensate
Dividend withholding tax: Unchanged at 20%
Interest Allowance: R23,800 – unchanged so less in real terms.
Fuel Tax and Road Accident Fund Up: 22c and 30c respectively – 52c increase on 4/4
Medical Aid: R310 (main and second member) tax credit. Enjoy it while it lasts, with pressure on the NHI, likely to bite the dust.
Retirement fund contributions: No change, still capped at R350,000 – i.e less in real terms.
Transfer duty:

 

 

 

 

 

 

Action: Increase in VAT on 1/4/2018 so you have a month to get stuff at the lower rate (large ticket items like Cars). Salary increases are just going to mean more tax – take more leave instead?

Dawn Ridler, CFP®, BSc Hons, MBA,
Founder, Kerenga – Wealth Ecology

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