President Jacob Zuma recently signed ten bills into law. The new tax laws include three Tax Amendment Acts which automatically brings several new big changes for South African taxpayers. The new tax bills signed into law include The Taxation Laws Amendment Bill; the Tax Administration Laws Amendment Bill; The Rates and Monetary Amounts and Amendment of Revenue Laws Bill.
These were mainly introduced to address major issues with current South African tax laws as well as to bring them in line with the new Taxation Laws Amendment Act. The tax laws were also amended in order to provide new incentives to current taxpayers.
‘Stealthy Taxation’ -The Rates and Monetary Amounts and Amendment of Revenue Laws Amendment Act
Addresses the issue of whether or not all national taxes should be adjusted to prevent “inflation erosion”. The Act dismisses the tax brackets for other tax tables which were last adjusted in 2014, stating that certain tax thresholds are set at a specific level for administrative reasons and do not require regular adjustments.
Increase in Capital Gains Tax
This includes any proceeds received after the sale of an asset, donation of an asset, death, cessation of residence, and the loss or destruction of an asset. Capital gains refers to any proceeds received after the disposal of an asset on or after 1 October 2001. It will continue to form part of the current Income Tax which, as a result, could see a little increase.
Overseas Assets Must Be Disclosed
This is included in the Rates and Monetary Amounts and Amendment of Revenue Laws Amendment Act which makes provisions for a six month “grace period” to allow South African citizens to disclose previously undisclosed overseas assets. This disclosure programme will run from 1 October 2016 to 31 March 2017 with a waiver of all penalties (including criminal charges), provided the application is successful.
Increase In New Car Tyre Levy
The Rates and Monetary Amounts and Amendment of Revenue Laws Amendment Act also in it, a new levy for buying car tyre. The levy is at a rate of R2.30/kg of tyre meaning tyre prices are expected to rise slightly so that the new mandatory tax doesn’t cut into profits.
No Financial Privacy
SA government will, through the help of a new international Common Reporting Standard (CRS), obtain detailed account information from their financial institutions and exchange that information automatically with other jurisdictions on an annual basis from September 2017.
Tax Deductions for Businesses
The New Taxation Laws Amendment Bill introduced changes on tax deductions for businesses. To those without disabilities, the value of the deduction is increased from R30,000 to R40,000 for qualifications from NQF (National Qualifications Framework) level 1 to NQF level 6 and decreased from R30,000 to R20,000 for qualifications from NQF level 7 to NQF level 10. But for those with disability, the value of the deduction is increased from R500,000 to R600,000 for qualifications from NQF level 1 to NQF level 6 and remains at R50,000 for qualifications from NQF level 7 to NQF level 10.
A cap of R20 million was also introduced on the claim allowed to each employer.