National Budget Assessment 2013

Finance Minister, Pravin Gordhan, is a kind man. He has refrained from implementing many of the tax increases that were widely predicted for the 2013/14 National Budget Speech on 27 February 2013, even though SARS has come up R16 billion below budget for 2012/13 and the National Deficit has increased to 5,2% of GDP.

See the video assessment (runs for 13mins 12 secs) by clicking on the link below:

National Budget Assessment 2013

Company Tax Rates

Company Tax rates have not increased. Neither have dividend tax rates. The only major change seems to be the implementation of a new tax regime for trusts with effect from the 2014/15 tax year. This has been anticipated for some time.

CGT rates will not increase as they did in the 2012/13 National Budget

Personal Tax

The anticipated increase in the super-tax rate to 42 percent did not happen. The tax brackets have been adjusted to effect a R7 billion fiscal drag adjustment. Very generous in the circumstances.

There have been small adjustments increasing:-

  • The medical rebate
  • Tax free interest allowances
  • Tax-free scholarships for employees families
  • Carry forward of disallowed section 18A donations to approved charitable institutions

Retirement Funds

There has been a slight rethink on the contribution percentages to be implemented from 1 March 2014. Now the proposal is:-

  •  Overall permissible contribution rate – 27,5%
  • Contribution cap – R350 000

The above is for all taxpayers regardless of age.

VAT

As anticipated, VAT rates did not increase. Vavi remains the big V in VAT. And COSATU pressure has helped contain increases in VAT rates.

Fuel levy

The fuel levy has only increased by 22,5 cents a liter. Again this is very generous. But it means the Gauteng Toll Roads are now a certainty.

Sin Tax increases

There are the usual sin tax increases. But less than last year. 8 cents a beer. R3,50 a bottle of dop and 60 cents for a packet of cigarettes.

Transfer Duty

Rates remain unchanged as expected.

Estate Duty and Donations Tax

Rates remain unchanged as expected.

Conclusion

So all-in, it’s a great budget for the consumer. But will the international rating agencies accept that RSA is doing enough? If not, downgrades could follow and this could be disastrous for interest rates and exchange rates.

Add to the above the implementation of Carbon taxes commencing in 2015 and increased energy prices, and RSA is looking at an energy crisis.

There is work to be done in all businesses and families of RSA. How are we going to reduce energy consumption? This is no longer just an environmental issue, it threatens every business in RSA today.

But, for today, we must give thanks to Pravin Gordhan for taking the side of the consumer.


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