- Will not exceed the tax threshold (see 4 below) for the tax year, or
- From interest, foreign dividends and rental will be R30 000 or less for the tax year.
The Section 10(1)(o)(ii) exemption for foreign employment income of tax residents effective 1 March 2020 remains at R1,25 million.
Withholding tax on interest from a RSA source payable to a non-resident is imposed at a flat rate of 15%. This may be reduced in terms of Double Tax Treaties.
The estate duty abatement (exempt threshold) remains at R3,5 million per person and a surviving spouse may also benefit automatically from any unused deduction in the first dying spouse’s estate. i.e. The abatement remains a combined maximum R7 million for the second dying spouse.
There is a similar treatment of Donations Tax namely 20% for donations of R30 million or less and increases to 25% for donations over R30 million.
The first R100 000 of amounts donated in each tax year by a natural person remains exempt from donations tax. Donations between spouses are fully exempt.
6. CAPITAL GAINS TAX (CGT)
- The annual capital gain exclusion for individuals remains at R40 000.
- The primary residence exclusion from capital gains tax remains at R2 million.
- The capital gain exclusion at death remains at R300 000.
- The effective rate of CGT is the range of 7.2% to 18% for individuals, 22,4% for companies and 36% for Trusts, although correctly structured Trusts can result in the individual rate being applicable.
7. TRANSFER DUTY
The rates remain, i.e. property costing less than R1 000 000 will attract no duty. A 3 percent rate applies between R1 000 000 and R1,375 million, 6 per cent between R1,375 million and R1,925 million, 8 percent between R1,925 million and R2,475 million, 11 percent between R2,475 million and R11 million and 13 percent thereafter.
8. RETIREMENT FUNDS (The tables remain as before)
Retirement Fund Lump Sum Withdrawal Benefits
| Taxable Income | Rates of Tax |
| 0 – 25 000 | 0% of taxable income |
| 25 001 – 660 000 | 18% of taxable income above 25 000 |
| 660 001 – 990 000 | 114 300 + 27% of taxable income above 660 000 |
| 990 001 and above | 203 400 + 36% of taxable income above 990 000 |
Retirement Fund Lump Sum Retirement Benefits or Severance benefits
| Taxable Income | Rates of Tax |
| 0 – 500 000 | 0% of taxable income |
| 500 001 – 700 000 | 18% of taxable income above 500 000 |
| 700 001 – 1 050 000 | 36 000 + 27% of taxable income above 700 000 |
| 1 050 001 and above | 130 500 + 36% of taxable income above 1 050 000 |
Tax Harmonisation of Retirement Fund Contributions
As from 1 March 2016 all retirement funds (pension, provident and retirement annuity funds) are treated similarly for tax contribution deduction purposes.
The tax deduction formula of 27,5% per annum (with a cap of R350 000) of the greater of taxable income and remuneration applies to members of all retirement funds, including provident funds.
Annuitisation
Pension and Retirement Annuity (RA) Funds will still require a compulsory annuity purchase upon retirement with two-thirds of such fund benefits whereas Provident Fund benefits may be commuted in full, until 1 March 2021 when annuitisation also applies, subject to certain vested benefits. The threshold below which a full fund benefit from a Pension or RA is allowed to be commuted is R247 500.
9.MEDICAL EXPENSES
- Taxpayers may in determining tax payable deduct monthly contributions to medical schemes (a tax rebate to be known as a medical scheme fees tax credit) up to R332 for each of the taxpayer and the first dependant on the medical scheme and R224 for each additional dependant.
- An individual who is 65 and older, or if that person, his or her spouse or child is a person with a disability, 33.3% of qualifying medical expenses paid and borne by the individual and an amount by which medical scheme contributions paid by the individual exceed 3 times the medical scheme fees tax credits for the tax year.
- Any other individual, 25% of an amount equal to qualifying medical expenses paid and borne by the individual and an amount by which medical scheme contributions paid by the individual exceed 4 times the medical scheme fees tax credits for the tax year, limited to the amount which exceeds 7.5% of taxable income (excluding retirement fund lump sums and severance benefits).
10. VAT
The rate remains at 15%. The compulsory VAT registration threshold remains at R1 million turnover per twelve month period
11. FOREIGN EXCHANGE
The offshore investment allowance remains at R10 million per adult person per calendar year. In addition the R1 million individual single discretionary allowance remains.
12. VOLUNTARY DISCLOSURE PROGRAM
Taxpayers who have undisclosed income whether local or foreign, may avail themselves of the permanent normal SARS Voluntary Disclosure Program (VDP) contained in the Tax Administration Act, in order to mitigate penalties.
As regards unauthorised foreign assets, a person may approach the SA Reserve Bank (SARB) for post SVDP regularisation and each case is considered on its own merits.