Budget highlights

Relief for Individuals

Personal Income Tax
Budget 2009 provides significant tax relief to individuals amounting to R13 billion countering the effects of inflation (bracket creep) as well as providing real relief.

This means that individuals younger than 65 years of age earning a total amount of–

• R60 000 will pay an amount equal to an average rate of 1.7% of the earnings and save R1 476;
• R200 000 will pay an amount equal to an average rate of 15.5% of the earnings and save R2 426;
• R750 000 will pay an amount equal to an average rate of 31% of the earnings and save R5 526.

Increased exemption for interest and dividend income
The annual exemption on interest earned for individuals younger than 65 years is raised from R19 000 to R21 000. The exemption for individuals older than 65 years increases from R27 500 to R30 000. The threshold for the taxfree portion of interest and dividends from foreign investment increases from R3 200 to R3 500.

Capital Gains Tax
Annual exclusion threshold for capital gains or losses increases from R16 000 to R17 500.

Medical Expenses
From 1 March 2009 the tax exempt or deductible portion of monthly contributions to medical schemes is increased from R570 to R625 for each of the first two beneficiaries and from R345 to R380 for each additional beneficiary.

Adjustments to Excise Duties

Excise duties are increased as follows:

• Malt beer - increased by 7 cents to 79 cents per 340ml can
• Unfortified wine - increased by 14 cents to R1.98 per litre
• Fortified wine - increased by 32 cents to R3.72 per litre
• Spirits - increased by R3.21 to R25.05 per 750ml
• Cigarettes - increased by 88 cents to R7.70 per packet of 20.

Fuel levy and the Road Accident Fund levy increased
On 1 April 2009 the fuel levy on petrol increases by 23 cents to R1.50 per litre and by 24 cents to R1.35 per litre for diesel. On the same date the Road Accident Fund levy on petrol and diesel increases by 17.5 cents per litre to 64 cents per litre.

Excise duties focusing on the Environment

• Adjustment to excise duties on motor vehicles. It is proposed to reduce the current ad valorem excise duty rate on the sale of new motor vehicles while introducing an additional excise duty component to take into account CO2 emissions.
• Increase plastic bag levy to 4 cents per bag
• Introduce a charge of about R3 per bulb on energy intensive light bulbs
• Increase international air passenger departure tax to R150 (R80 to Botswana, Lesotho, Namibia and Swaziland)

Effect on Businesses

No change is proposed to corporate tax rates.

Incentives for investments in energy efficient technologies
It is proposed that investments by companies in energy efficient equipment should qualify for an additional allowance of up to 15 per cent, on condition that there is documentary proof of the resulting energy efficiencies, certified by the Energy Efficiency Agency.

Source: SARS