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