With this year’s National Budget, as announced by Minister Pravin Gordhan on Wednesday 22 February 2017, the following fast facts as it relates to the healthcare industry are highlighted for your attention
Source: Resomed
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INCOME TAX Individuals and special trusts A new top bracket has been introduced for personal income tax - individuals’ taxable income above R1.5 million per year will be taxed at 45%. Previously, the top bracket of 41% was set at R701 301. The new top marginal income tax bracket is accompanied by partial relief for bracket creep 1. The personal income tax rates for the 2017/2018 tax year are listed below. Companies and trusts
TAX RATE The income tax rate for companies has remained unchanged at 28%, while the income tax rate for trusts (other than special trusts) has increased to 45%. TAX THRESHOLDS Tax thresholds have increased to: R75 750 for taxpayers younger than 65 R117 300 for taxpayers aged 65 to below 75 R131 150 for taxpayers aged 75 and older REBATES The primary rebate (deductible from tax payable) has increased to R13 635 per year for all individuals. The secondary and tertiary rebates have increased to: R7 479 for taxpayers aged 65 and older R2 493 for taxpayers aged 75 and older INTEREST EXEMPTIONS Interest exemptions have remained unchanged at: R23 800 per annum for individuals younger than 65 years R34 500 per annum for individuals 65 years and older MEDICAL TAX CREDITS Monthly tax credits for medical scheme contributions will increase from: 1.R286 to R303 per month for the person who pays the contributions and the first dependant on the medical scheme 2.R192 to R204 per month for each additional dependant Bracket creep occurs when the income tax tables are not fully adjusted for inflation, and inflationary salary adjustments increase an individuals’ effective tax rate, reducing real income. As the increases to taxable income brackets, the tax thresholds, and the rebates are below the expected level of inflation, taxpayers will face a real increase in their effective personal income tax rate in 2017/2018. INTEREST WITHHOLDING TAX (IWT) AND DIVIDEND WITHHOLDING TAX (DWT) Interest Withholding Tax (IWT) on interest from a South African source payable to non-residents has remained unchanged at 15%. Interest is exempt if payable by any sphere of the South African government, a bank or if the debt is listed on a recognised exchange. Dividend Withholding Tax (DWT) on dividends paid by resident companies and by non-resident companies for shares listed on the JSE has increased from 15% to 20%, effective 22 February 2017. The exemption and rates for inbound foreign dividends have also been adjusted in line with the new local DWT rate, resulting in a maximum effective rate of 20%. TAX-FREE SAVINGS ACCOUNTS The annual limit on contributions to tax-free savings accounts has increased from R30 000 to R33 000. RETIREMENT LUMP SUM TAXATION At retirement: The retirement lump sum tax table is unchanged. The table below illustrates how retirement lump sums will be taxed. Click to read more If you have any queries on your personal or business tax, contact our Finance Department, email finance@daberistic.com, tel (011)658-1333 Source: Allan Gray Budget 2017 was unusual due to the tough economic environment in 2016 and SA narrowly having avoided going into recession, according to independent economist Sandra Gordon. She was the guest speaker at the monthly networking forum of the Western Cape Business Opportunities Forum (WECBOF) on Wednesday evening. "The slow SA economy has led to little revenue, which put a squeeze on Treasury. Ratings agencies are concerned that SA is building up debt so quickly and the country sits right on the line between being investment grade or junk," said Gordon. "If SA is downgraded to junk status it will raise the cost of borrowing. It can take up to seven years to get out of junk status. Budget 2017 was, therefore, so tight and constrained that the consensus is that SA won't be downgraded in the first half of 2017." Treasury has indicated that the path SA is on at the moment is not sustainable. That leaves the question of how economic transformation could be achieved. "Budget 2017 was more of a political vision. Resources are so limited that there is not much government can do for SMEs until the economy gets better," said Gordon. "That is why I think it is not worth waiting for government to do something for SMEs." At the same time, she said there is an improved economic outlook for 2017. This could mean that interest rates are cut later this year or early next year. "Entrepreneurs should be aware of how things are changing," concluded Gordon. Written by : Carin Smith Source: Fin24 “In these tough times we draw strength from the resilience and diverse capabilities of our people, our business sector, our unions and our social formations.”Pravin Gordhan, Budget Speech 22 February 2017 Personal tax
Business and trusts
Employers
Retirement reform
Other tax proposals
1 July 2016 was the start of the 2016 Tax Season for Individuals. Be ready. We’re ready, South Africa. Let’s make our country great. During Tax Season, you need to submit your income tax return (ITR12) so SARS can reconcile the tax on your income and the tax-deductible expenses for the year of assessment (1 March 2015 - 29 February 2016). This may, in some cases, result in a refund. Tax Season runs from July to November every year. For provisional taxpayers who submit via eFiling, it runs until January of the following year. Important due dates
To get ready to submit your tax return, you will need to gather all your supporting documents which include the following: For a complete list of supporting documents, click here.
Please contact Su-Chin or Su-Lan, Tel 011 658 1333, email finance@daberistic.com to get any assistance on Tax or Vat queries. Source: SARS The Value Added Tax Act 89 of 1991 (the VAT Act) requires VAT to be levied by a vendor on the supply of goods or services in the course or furtherance of an enterprise carried on by the vendor. A vendor is any person who is or is required to be registered in terms of the VAT Act. The fact that a vendor includes any person that is required to be registered makes it clear that a person’s liability for VAT is not dependent on whether the person is in fact registered as a vendor but rather whether the person is required to be registered as a vendor.
The VAT Act requires registration as a vendor on either a prospective or retrospective basis. On a prospective basis, a person would be required to register as a vendor on the first day of the month in which the total value of the vendor’s taxable supplies in terms of a contractual obligation would exceed R1 million (excluding VAT) during the following 12 months. On a retrospective basis, a person would be required to register as a vendor on the last day of the month during which the total value of the vendor’s taxable supplies exceeded R1 million (excluding VAT) during the previous 12 months. Therefore, should a person’s taxable supplies (which excludes exempt supplies) exceed the R1 million threshold, that person would be regarded as a vendor from the beginning of the particular month (on a prospective basis) or from the end of the particular month (on a retrospective basis) and would have to levy output tax from that point in time, irrespective of the fact that the person may not be registered as a vendor at that point in time. Should the vendor fail to register, the VAT Act would deem all of the prices charged by the vendor after his liability for registration came into existence, to include VAT at 14%. This would be the case irrespective of whether VAT was in fact charged by the vendor. SARS would therefore be entitled to recover 14% from all prices charged by the person from the date the person should have been registered as a vendor. The 14% retrospective recovery of VAT from the prices charged by the vendor may eliminate all of the vendor’s profits even before considering the penalties and interest that the vendor could be subject to. These penalties include inter alia:
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