Melissa Jacobs of MJ Accountants talks us through the 2022/2023 Budget Speech.
Despite a grim debt backdrop, this year’s budget offered some good news on tax income and tax relief. Education and culture will again receive the largest share of the government budget, while state-owned enterprises will still face tough love, Finance Minister Enoch Godongwana warns.
But the good news is that tax revenue collected for the past year was R182 billion more than budgeted, thanks in part to stronger-than-expected personal income tax collections and VAT – but mostly due to mining companies that benefitted from a boom in commodity prices. At least R57 billion of the extra income has already been spent, mostly on assistance to businesses and the South African Special Risk Insurance Association (Sasria) following the civil unrest last year.
The overall message is that the recovery of our economy is more important than the increase in taxes. Here are the changes:
Corporate Income Tax Rate: For companies with years of assessment ending on or after 31 March 2023, the corporate income tax rate will reduce to 27%. The reduction will be funded by limiting the interest deduction and assessed losses.
Personal Income Tax: Personal income tax brackets and primary, secondary and tertiary rebates will be increased by 4.5%, in line with inflation. The annual tax-free threshold for those under 65 years will increase to R91 250.
Medical Scheme Fees Tax Credits: The value of the medical tax credit is proposed to increase by inflation from R332 to R347 per month for the first two beneficiaries. The monthly credit for the remaining beneficiaries is proposed to go up from R224 per month to R234 per month.
Excise: There will be an increase in excise duties on alcohol and tobacco of between 4.5% and 6.5%. In addition, government proposes a new tax on vaping products of at least R2.90 per millilitre from 1 January 2023.
Fuel Levies: For the first time since 1990, there will be no hike in the fuel or Road Accident Fund levy.
Capital Gains Tax: No changes are proposed to the capital gains inclusionary rates.
