Some relief for stretched individuals

Barry Knoetze

Given the worsening economic realities still facing the minister of finance, it came as a surprise that he provided 5.2% adjustments to the individual tax brackets and rebates, resulting in real personal income tax relief for already-stretched individual taxpayers.

The net result is that, with effect from 1 March, the maximum rate of 45% applies to taxable income in excess of R1 577 301 (up from R1 500 000) while the lowest rate of 18% applies to taxable income up to R205 900 (up from R198 850) with similar adjustments to the brackets in between.

There will also be 5.2% increases in the primary, secondary and tertiary rebates, resulting in the tax-free threshold increasing from R79 000 to R83 100 for taxpayers under 65 years of age.

It was widely expected that the medical tax credit available to taxpayers who are members of medical aid schemes would not be increased, however, it has in fact been increased nominally from R310 to R319 per month for each of the first two dependants and from R209 to R215 per month for every subsequent dependant.

As regards to the taxing of foreign remuneration that comes into effect on 1 March, the proposed exemption will be increased from R1 million to R1.25 million. The minister also announced a comprehensive review of the pay-as-you-earn system with a view to implementing a more modern automated process.

Barry Knoetze is the associate director at PwC