Adding Value to Tax
Adding Value to Tax
How tax can work for you
It might be just the beginning of 2019, but already the end of the tax year looms! In addition, the government is about to release the national budget – the results of which can directly affect your purse or pocket.
Johan Swart - Head of Tax Services
18 February 2019Legal&Tax’s expert in all matters of money, Johan Swart, takes us through the essential information about these events.
Tax season 2018/2019 closes
The 28th of February 2019 signals the end of the tax year. As this deadline approaches, consider the following:
- If, after what might have felt like the ‘75-day’ month of January, you still have some of your bonus left, consider using it towards a tax-free investment – or even or topping up your retirement annuity fund. You are able to put away up to R33 000 in a tax-free savings account each year, without being taxed at all. Retirement fund contributions can be either up to 27.5% of your income, or up to the amount of R350 000. Remember any contributions made before the end of February will maximise your tax benefits later on.
- Also, if you receive a travelling allowance, or use a vehicle provided by your employer, remember to close off your logbook by the evening of the 28th of February.
National budget 2019
The National Budget is always more interesting in an election year, as politics tend to come into play. Currently there is very little room for the government to increase taxes – whether this be personal or company tax. Also, VAT was already increased last year.
Therefore, where we can expect higher than normal increases is in the fuel levy, as well as in sin taxes.
The sin tax serve a double purpose – not only is it an important income source for the government, but it also encourages a healthier lifestyle. In addition to the duties (taxes) on tobacco and alcohol, we may also see a substantial increase in sugar tax. Currently, the sugar tax is only applied to soft drinks. However, we may now see it being expanded to other products that contain a lot of sugar. If you are a chocoholic, it may be a good time to stock up, just in case!
There is also a chance that yet another tax bracket to tax the rich will be introduced. The current top tax bracket is 45% for persons earning more than R1.5 million – we may see a 50% tax for the high-income earners – perhaps an introduction of a R3 million and above annual income bracket.
The Minister of Finance, Tito Mboweni, is likely to give important direction in the budget as to the fate of state-owned enterprises, like Eskom, Transnet, SAA, Denel and the Post Office. Mismanagement of these businesses has cost the taxpayer billions during the last few years. Since his appointment in October last year, Minister Mboweni has already been taking a hard line on these enterprises. Eskom has even recently announced a reduction of its workforce by seven thousand people within five years. It is likely that the Minister will announce further drastic measures in the budget, in order to plug up the seemingly never-ending drain of these state-owned enterprises. We may even see the state selling off sections of these enterprises to private business.
Need more information?
Mboweni will be delivering his budget speech in Parliament on February 20th. Be sure to connect with our Legal&Tax’s social pages on the day. We will be your companion in explaining clearly how the budget will directly affect your bucks!
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