DALL·E
Finance Minister Enoch Godongwana, introduced the 2024 Budget with some stark reminders:
“The budgets we have tabled since 1994, have been about securing the goal of growing the economy, so that we can do more to address the inequalities and deprivation that still scar our society and undermine the promise of democracy. So, it is with a great sense of privilege and purpose that I stand before you to present this last budget of the sixth democratic administration.”
Although the 2024 Budget didn’t make any significant or wholesale changes to the South African tax landscape, there are still important updates to be aware of:
Overall
- This budget contains tax increases to raise an additional R15 billion in 2024/25, predominantly through personal income tax. The increases have been effected by not adjusting tax brackets, rebates and medical tax credits for inflation.
- Tax revenue for 2023/24 is R56.1 billion less than estimated in 2023. This shortfall was largely attributed to the decline in corporate profits, particularly in mining. Compared to last year, our budget deficit for 2023/24 is estimated to deepen, from 4.0 to 4.9 per cent of GDP.
- The budget shortfall will be funded with a once-off withdrawal of 30% from the R500bn strategic Gold and Foreign Exchange Contingency Reserve, which is held by the Reserve Bank.
- As a result of widespread power cuts, operational and maintenance failures in rail and at ports, and the high cost of living, our 2023 GDP growth estimate has been revised down to 0.6%
- Consolidated Government expenditure is increased from R2 240 billion to R2 370 billion.
- Debt servicing costs and the social wage amount to 80% of budgeted payments by Government.
- To address high levels of illicit tobacco sales, SARS has deployed CCTV and related technologies at licensed tobacco manufacturers.
- There has been an increase in revenue collections from the illicit gold and tobacco industry, as a result of ongoing investigations and prosecutions.
- No changes to the general fuel levy, resulting in tax relief of roughly R4 billion.
- NHI has been granted R1.4 billion over the next three years for preparatory work.
- The IEC has been allocated an additional R2.3 billion to run the election in May.
Taking stock
- There are proposed refinements aimed at taxing deemed income (i.e. income assigned to another person whether or not the income is actually available) for those funding trusts.
- On environmental taxes: Carbon tax is increased from R159 to R190 per tonne of carbon dioxide equivalent, and the plastic bag levy is increased to 32 cents.
- The tax allowance provided for learnership agreements under section 12H is extended to 31 March 2027.
- Producers of electric vehicles in South Africa can now claim 150% of qualifying investment spending as a tax deduction. This incentive is aimed at speeding up the transition to new energy vehicles.
- Government will reconsider the generation threshold and leasing restrictions of section 12B. Any proposals will be designed to take effect from 1 March 2025.
- Using big data and artificial intelligence, SARS’ automated risk engines prevented more than R60 billion in impermissible VAT refunds and fraud over the past year.
- Excise duties will increase on alcoholic beverages, by between 6.7% and 7.2% and on tobacco, by between 4.7% and 8.2%.
- Of the total revenue collected by Government, 40% is raised from personal income tax, 25% from VAT and 16% from corporate tax.
- A global minimum tax rate of 15% is to be introduced for large multinational groups. The proposed reform is expected to yield an additional R8 billion in corporate tax revenue in 2026/27.
Monetary amendments
The more things change, the more they stay the same – No changes to:
- The personal income tax brackets,
- CGT rates and exclusions,
- the VAT rate,
- transfer duty,
- fuel levy,
- personal and medical tax rebates.
The only significant change:
- Increases in sin taxes and environmental levies.
Listen to the AJM post budget panel moderated by; Karyn Maughan, News24 and including; Dr Albertus Marias director AJM Tax, Azhar Varachhia of Alpha Plus Capital and Simon Brown.
Tax Tuesday
Being tax efficient is an important part of great financial management. In this blog, a group of South African tax experts at AJM Tax share their tips and explanations on tax issues. Learn everything you need to know about tax, from deductions you never knew about to retirement savings and capital gains. The first Tuesday of every month is Tax Tuesday.
