The 2023 National Budget Speech outlines the government’s priorities for the next financial year. The National Budget is no different from our personal budgets, as it focuses on managing income, expenses, medium-term spending, debt repayment, and long-term financial implications.
As a result, the Budget Speech affects you and I as it may mean we will pay more taxes. It even affects our businesses.
Tax revenue collections for the 2022/2023 tax year are expected to total R1.69 trillion. This exceeds the 2022 Budget estimate by R93.7 billion and as a result, there are no major tax proposals in the 2023 budget.
Here we look at a summary of some of the key changes to the tax legislation for the 2023/2024 tax year:
INDIVIDUALS
The Commissioner has provided some relief for individuals as follows:
- The personal income tax brackets will be fully adjusted for inflation. The tax-free threshold is increased from R91 250 to R95 750.
- Medical tax credits will also be increased by inflation. The medical tax credits are now R364 per month for the first two members, and to R246 per month for additional members.
- Individuals who install rooftop solar panels from 1 March 2023 will be able to claim a rebate of 25% of the cost of the panels, up to a maximum of R15 000. The rebate can be used to reduce their tax liability in the 2023/2024 tax year. This incentive will be available for one year.
- The retirement tax tables for lump sums withdrawn before retirement and at retirement, will be adjusted upwards by 10%. This means that the tax-free amount that can be withdrawn at retirement increases to R550 000.
- The brackets of the transfer duty table will be increased by 10%. Therefore, properties below R1.1 million will avoid any transfer duty payments.
A comparison of the 2022/2023 and 2023/2024 tax tables for individuals are as follows:
COMPANIES
In the prior budget speech, effective for tax years ending on or after 31 March 2023, the corporate income tax rate was reduced by 1 percentage point to 27%. There has been no changes to the company tax rate in the 2023 budget speech.
The following incentives were discussed for companies:
- From 1 March 2023, businesses will be able to reduce their taxable income by 125 per cent of the cost of an investment in renewables.
- The research and development tax incentive will be extended for 10 years. It will be refined to make it simpler and more effective.
If your company is a small business corporation as defined in section 12E of the Income Tax Act No 58. of 1962, taxable income up to R95 750 will be tax free for years of assessment ending any date between 1 April 2023 and 31 March 2024.
EXCISE DUTIES
There has been an overall increase of 4.9% in excise duties on alcohol and tobacco.
There is an increase in excise duties of:
- 10 cents for a 340 millilitre (ml) can of beer; and
- 18 cents for a 750ml bottle of wine; and
- R3.90 for a 750ml bottle of spirits; and
- R5.47 for a 3 gram cigar; and
- 98 cents for a pack of 20 cigarettes.
Fortunately there are no changes to the general fuel levy and road accident fund levy.
If you are unsure of how the Budget Speech affects you and/or your business, have a chat with us and we can provide you with more detail. Book a call with us here: https://www.santosbiz.co.za/contact/
