Monthly Archives: July 2016

Nelson Mandela Day

Wow …”spread the love” what a great way to spend your 67 minutes. We reached the target of 27 000 sandwiches in 67 minutes for Mandela Day. Thanks to the Newtons staff who assisted in making this an easy target and to Saints Bfn and Mizanne Connan for letting us be part of it.

SANBS blood drive 8 July 2016

Newtons employees rushed in to donate blood after receiving a heartfelt KFC breakfast.

 

 

 

The 2016 tax season is open

 As is the case every year, the Commissioner for SARS recently published the annual notice to officially ‘open’ the 2016 tax season. Individuals are now able to file their annual income tax returns for the 2016 year of assessment (which ended on 29 February 2016) from 1 July.

 In the recent Government Gazette No. 40041 (dated 3 June 2016) the persons required to file annual income tax returns for the 2016 year of assessment was announced. The following time frames will apply:

  • For a company, within 1 year of its year-end (for example, a company with a financial year-end of 31 March 2016 is required to submit its 2016 tax return by 31 March 2017).
  • For all other taxpayers (including natural persons and trusts), returns are to be submitted at the latest by:
    •  23 September 2016 for persons still making use of manual hardcopy returns;
    •  25 November 2016 for persons (excluding taxpayers registered for provisional tax) making use of SARS’ eFiling system; and
    • 31 January 2017 for all provisional taxpayers making use of SARS’ eFiling system.

As was the case in previous years, companies may only file returns using eFiling – manual returns are no longer allowed in terms of the above SARS notice.

Various criteria are listed which, if met, means that a person is obliged to submit a return to SARS. For example, all companies, whether incorporated in South Africa or not, are obliged to submit returns if South Africa is the place from which the company is effectively managed. Non-tax resident companies, but which were incorporated in South Africa, must also render returns, as well as non-tax resident companies incorporated outside of the Republic and earning income from a South African source.

Taxpayers (excluding companies) are required to submit returns if they carried on any trade in South Africa during the 2016 tax year. This does not include the mere earning of a salary. A variety of other factors are listed in terms of which non-company taxpayers are required to submit returns. The primary exemption from the requirement to submit a return for tax resident natural persons though is if the person earned only a salary from a single employer during the year which did not exceed R350,000, and income from interest for that person was also less than R23,800 (or R34,500 if the person is older than 65).

Quite a number of taxpayers are therefore potentially exempt from the requirement to submit an income tax return, even if registered for income tax purposes. However, even though it may in terms of the notice not be required to submit a tax return, it may still be beneficial to do so. Natural person taxpayers are often under the unfortunate impression that the completion of a return necessarily gives rise to the incidence of tax. This is of course not so and many may have suffered tax consequences during the year already by having amounts deducted from salaries in the form of pay-as-you-earn contributions deducted from their salaries. This of course amounts to a mere cash flow mechanism introduced to ensure a steady supply of cash to the fiscus and which contributions are set-off from the annual tax liability when the annual tax return submitted is assessed. However, the opportunity to negate this is presented through the completion of a tax return and claiming deductible expenses in the form of e.g. medical aid or pension fund contributions. The principle in this regard is that all income is taxable irrespective of whether a return is completed or not. However deductions can only be claimed by completing a tax return and natural persons specifically should jump at the opportunity to do so.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Tax rates announced in the budget

On 24 February 2016, Min. Pravin Gordhan tabled National Treasury’s annual budget. While it contained a few surprises (both for what it said and that which it did not), the focus in studying the budget has always been the new tax rates proposed.

Below we set out the new rates that will apply going forward. The two most significant changes are the increase in the capital gains tax inclusion rate, as well as the introduction of yet another transfer duty scale for properties purchased with a value in excess of R10 million.

It is important to note that although not approved by Parliament as yet, the below rates are unlikely to be changed.

Income tax rates for individuals for the 2016/2017 tax year:

Taxable income (R)

 

Rates of tax (R)

 

0 – 188 000

 

18% of each R1

 

188 001 – 293 600

 

33 840 26% of the amount above 188 000

 

293 601 – 406 400

 

61 296 31% of the amount above 293 600

 

406 401 – 550 100

 

96 264 36% of the amount above 406 400

 

550 101 – 701 300

 

147 996 39% of the amount above 550 100

 

701 301 and above

 

206 964 41% of the amount above 701 300

 

Interest Exemptions from Income Tax (unchanged):

 

2017

 

Person younger than 65

 

R23 800

 

Person 65 and older

 

R34 500

 

Medical credits available to be deducted against an income tax liability:

  Per month   2017

For the taxpayer who paid the medical scheme contributions   R286

For the first dependant   R286

For each additional dependant(s)   R192

 

The following rebates will apply for individuals against their tax liability calculated in accordance with the above:

Cumulative Rebates from Income Tax for Individuals:

Tax Rebate

 

Primary

 

R13 500

 

Secondary (65 and older) (unchanged)

 

R7 407

 

Tertiary (75 and older) (unchanged)

 

R2 466

 

Income Tax for companies is still levied at 28%, whilst the rate is retained at 41% for trusts.

Small Business Corporations are not taxed at a flat rate of 28%, but according to the below table for tax years ending between 1 April 2016 and 31 March 2017:

Taxable income (R)

 

Rate of tax (R)

 

0 – 75 000

 

0%

 

75 001 – 365 000

 

7% of the amount above 73 650

 

365 001 – 550 000

 

20 395 21% of the amount above 365 000

 

550 001 and above

 

59 150 28% of the amount above 550 000

 

Capital gains tax is calculated by including 40% (previously 33.3%) of an individual’s net capital gains (less R40,000) in their taxable income to be used for calculating their income tax liability (see table above). The inclusion rate for ordinary trusts and companies are increased to 80% (previously set at 66.6%).

The VAT rate has been retained at 14%. The same applies to donations tax and estate duty, both still levied at 20%.

Transfer duty applicable to individuals:

Value of the property (R)

 

Rate

 

0 – 750 000

 

0%

 

750 001 – 1 250 000

 

3% of the value above 750 000

 

1 250 001 – 1 750 000

 

15 000 6% of the value above 1 250 000

 

1 750 001 – 2 250 000

 

45 000 8% of the value above 1 750 000

 

2 250 001 – 10 000 000

 

85 000 11% of the value above 2 250 000

 

10 000 001 and above

 

R937,500 13% of the value exceeding R10 000 000

 

Turnover tax rates:

 Taxable turnover (R)

 

Rate of tax (R)

 

0 – 335 000

 

0%

 

335 001 – 500 000

 

1% of the amount above 335 000

 

500 001 – 750 000

 

1650 2% of the amount above 500 000

 

750 001 and above

 

6 650 3% of the amount above 750 000

 

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)