2018 National Budget unpacked
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2018 National Budget unpacked

Updated: 09:19 06-03-2018

The 2018 Budget has given South Africans and businesses alike a renewed sense of optimism and hope. This was seen with the Rand strengthening in late afternoon trade, reacting positively to the much-anticipated Budget Speech by Finance Minister Malusi Gigaba.

“Focus in this year’s budget speech has been primarily on VAT with the main proposal for an increase from 14% to 15% across the board. This will place further burden on consumer’s disposable income. Given this increment, we encourage consumers to be vigilant when spending and to avoid unnecessary debt at all costs,” says Hugo van Zyl: FNB Fiduciary Specialist. 

The budget further outlined an implementation of higher taxes to luxury goods that are consumed by wealthier households such as cosmetics, electronics and motor vehicles. In addition, a new classification of cellular phones to include smartphones will be introduced to ensure that they attract ad valorem excise duties.

Other focus areas include:

Personal income Tax: No inflation adjustment is expected for the four highest income tax brackets. Government will raise almost R7 billion through lower-than-inflation increases to personal income tax brackets and rebates.

High-income earners will bear the brunt of income tax increases due to the lower than inflation increases to personal income tax brackets and rebates; whilst the lower personal income tax brackets will be partially adjusted for inflation.

All taxpayers will benefit from the increase personal abatements and slightly increased medical tax credits. The latter was not, as widely speculated, removed or curbed yet some minor changes were announced. 

Fuel levy: The fuel levy will increase by 52c per litre which will come into effect from 4 April 2018.

Estate Duty: Estate duty is currently levied at a flat rate of 20%. As from 1 March 2018 the rate will increase to 25% on the dutiable amount of an estate above R30 million. The primary abatement remains R3 500 000. We encourage all impacted customers to speak to a FNB Financial Advisor; who can assist in reassessing the structure and viability of their personal estates.

 

Donations Tax: Donations tax is currently levied at a flat rate of 20%. As from 1 March 2018, donations exceeding R30 million in one tax year will attract donations tax at a rate of 25%. The annual exemption applicable to natural persons remains R100 000.

The Health Promotion Levy: Taxes on sugary beverages will be implemented from 1 April 2018.

Excise duty rates for tobacco and alcoholic products: Duties on tobacco products will increase by 8.5% and duties on alcohol will increase by between 6% and 10%. Van Zyl says, “Easing budget constraints and improving healthy lifestyles should be promoted and should be a key focus for all consumers.”

Cryptocurrency: Legislative changes to Income Tax and VAT are proposed to address cryptocurrency transactions.

Environmental Levies: Government’s commitment to saving the environment has resulted in an increase to various environmental levies including plastic bags, lightbulbs and the imminent introduction of the Carbon Tax legislation. Organisations across all sectors should endeavour to drive sustainable practices in their businesses.

Higher Education: The recent funding announcement for free university education to students from poor households in South Africa was confirmed in the budget speech. Parents need to continue saving and investing for their child’s education; for a brighter future.

Retirement: The retirement landscape remains a pressure point in the South African economy. Enjoy your retirement without compromising on your current lifestyle. We encourage all consumers to continue saving towards their retirement and to take advantage of the contribution limits available.

Tax-free Savings Accounts: The annual Tax Free Savings limit remained at R33 000 per year. Consumers still have an opportunity to take advantage of tax free savings before the 28th of February 2018. This investment will help promote a healthy savings culture; which will foster economic growth in South Africa.

Source: Issued by FNB Published: 07:30 02-03-2018

Posted by on March 2, 2018.

Categories: Business, Personal Finance

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Updated: 12:46 19-Jun-2018

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