Minister Pravin Gordhan recently held the new National Budget Speech for 2013. This is a quick summary of changes to the new 2013/14 tax rates as well as other items affecting the every man on the street.
The Budget Speech 2013, was watched with great expectation, and it was clear that government is treading on eggshells with a rather conservative budget being unveiled in Parliament. Most South Africans will however be pleased with the net result of almost R7bn in tax relief for individual tax payers.
Herewith a summary of the items most likely to affect you in 2013/14:
Tax Tables 2013/2014
Income tax: Individuals and Trusts
Tax rates (year of assessment ending 28 February 2014)
Taxable Income Rates of Tax
| 0 – 165 600 | 18 % of each R1 | |
| 165 601 – 258 750 | 29 808 | + 25% of the amount over 165 600 |
| 258 751 – 358 110 | 53 096 | + 30% of the amount over 258 750 |
| 358 111 – 500 940 | 82 904 | + 35% of the amount over 358 110 |
| 500 941 – 638 600 | 132 894 | + 38% of the amount over 500 940 |
| 638 601 + | 185 205 | + 40% of the amount over 638 600 |
Rebates
- Primary Rebate R 12 080
- Secondary (Persons 65 and older) R 6 750
- Tertiary (Persons 75 and older) R 2 250
Tax Thresholds
The tax thresholds at which liability for normal tax commences, are:
- Persons under 65 R 67 111
- Persons of 65 – 74 years R 104 611
- Age 75 and older R 117 111
Note: the tax threshold is above the SITE limit – therefor there is effectively no more SITE
Medical Tax Credits (MTC)
- Main member R 242
- First dependant R 242
- Each additional dependant R 162
Subsistence Allowances And Advances
Where the recipient is obliged to spend at least one night away from his/her usual place of residence on business and the accommodation to which that allowance or advance is granted to pay for:
- meals and incidental costs, an amount of R319 per day is deemed to have been expended;
- incidental costs only, an amount of R98.00 for each day.
The rate for foreign travel will be gazetted soon and will be found on www.sars.gov.za under the Legal and Policy tab.
Table For Calculation Of Rate Per Km/Travel Allowance
| Value of the vehicle | (c/km) | (c/km) | |
| 0 – 60 000 | 19 310 | 81.4 | 26.2 |
| 60 001 – 120 000 | 38 333 | 86.1 | 29.5 |
| 120 001 – 180 000 | 52 033 | 90.8 | 32.8 |
| 180 001 – 240 000 | 65 667 | 98.7 | 39.4 |
| 240 001 – 300 000 | 78 192 | 113.6 | 46.3 |
| 300 001 – 360 000 | 90 668 | 130.3 | 54.4 |
| 360 001 – 420 000 | 104 374 | 134.7 | 67.7 |
| 420 001 – 480 000 | 118 078 | 147.7 | 70.5 |
| exceeding 480 000 | 118 078 | 147.7 | 70.5 |
Prescribed Rate For Reimbursive Kilometres
The SARS prescribed rate per kilometer increased from R3.16 to R3.24.
Accommodation Fringe Benefit
The value of ‘B’ in the formula used to determine the value of the accommodation fringe benefit increased to R67 111.
Retirement Reform
Possible changes from March 2014 only
From March 2014 an employer’s contribution to retirement funds on behalf of an employee will be treated as a taxable fringe benefit in the hands of the employee. Individuals will from that date be allowed to deduct up to 27.5 per cent of the higher of taxable income or employment income for contributions to pension, provident and retirement annuity funds with a maximum annual deduction of R350 000. Contributions above the cap are carried forward to future tax years.
Changes In The Taxation Laws Amendment Act Effective 1 March 2013
Taxation of Variable Remuneration
Remuneration should be taxed when it is accrued or when it is received (whichever happens first). As from 1 March 2013 an exception has been made to the taxation of variable remuneration. Variable remuneration should be taxed in the month when it is paid to the employee (not when it is accrued).
Variable remuneration is defined as:
• Overtime
• Bonuses
• Commission
• An allowance or advance paid in respect of transport expenses such as a travel allowance
• Leave Paid out
Taxation of Company Cars under an “Operating Lease” agreement
If an employer rents a car under an operating lease agreement and provides the use of it to the employee, the employee should be taxed on the actual cost to the employer under the operating lease and the fuel cost.
Operating Lease includes the following conditions:
• The employer must rent the vehicle from a company that is in the business of renting cars
• The vehicle may be rented by the public for a period of less than a month
• The cost of maintaining the vehicle must be borne by the rental company
• Risk of the loss or damage must not be assumed by the employer
For example: The company rents a car from Avis which the employee can use as his company car. The lease agreement qualifies as an “operating lease”. The company pays Avis R5000 per month and the fuel was R2000. The fringe benefit value is R7000 (R5000 + R2000). 20% / 80% / 100% of the R7000 should be included in remuneration.
The taxation of company cars which are not subject to an “operating lease” agreement stays unchanged.
