New Tax Table for South Africans 2017/18

Pravin Gordhan announced tax increases, some tax relief and fresh taxes on the horizon at this years budget. But how does this all impact everyone’s pockets. The income tax table for individuals and trusts is below.- Stuart Lowman

Tax increases

2017’s higher taxes of R28bn come from a five sources:

• R12.1bn, will accrue through “bracket creep”. Taxable income thresholds are usually adjusted to offset inflation; this year the adjustment will be minimal.

• R4.4bn will be raised through an increase to 45% in the marginal tax rate on income above R1.5 million. This will affect about 100 000 taxpayers.

• R6.8bn will be raised through the hike from 15% to 20% in the dividend withholding tax, rationalized because the higher marginal tax rate would otherwise offer an arbitrage opportunity.

• R3.2bn will be generated by a net 39c per litre increase in the fuel taxes. Since 2014, tax on petrol has risen from 27% to 36% of the pump price; and for diesel from 28% to 45%.

• R1.9bn comes from increased excise duties for alcohol and tobacco of between 6% and 10%.

Tax relief

Limited tax relief will be provided through:

• There is a marginal increase in the threshold for taxable income (from R75 000 to R75 750) and property transfer duties (from R750 000 to R900 000).

• Allowance for tax-free savings accounts increased to R33 000.

• Medical tax credit is increased in line with inflation, but is in line for a reduction in future as part of financing the National Health Insurance.

• Fresh taxes coming soon

• Negotiations continue on the Sugar Tax. It will be implemented later this year.

• The proposed carbon tax and its date of implementation will be considered further in Parliament this year.