Personal tax cuts of R7bn

Image: GCIS

However‚ this compares unfavourably with more generous cuts of R9.5bn in 2012/13 and R8.1bn in 2011/12.

Addressing Members of Parliament on Wednesday (27 February) during his fourth Budget presentation‚ Gordhan said personal income tax brackets and rebates had been partially adjusted for "fiscal drag" to take inflation into account.

Taxpayers with an annual taxable income of R150‚000 to R250‚000 are expected to account for 13.2% of the expected personal income tax revenues in 2013/14. Significantly‚ 54.4% or personal tax revenues are expected to come from individuals earning R500‚000 or more‚ although they only account for 8.4% of taxpayers.

Under the new tax proposals‚ the income tax threshold for people under 65 will be raised to R67‚111 from R63‚556‚ while over 65s will need to earn R104‚611 before paying any tax compared to R99‚056 currently. Over 75s can earn R117‚111 compared to R110‚889 previously.

The primary rebate for taxpayers will rise to R12‚080 from R11‚440 while the secondary rebate will increase to R6‚750 from R6‚390. The tertiary rebate for over 75 years has been lifted to R2‚250 from R2‚130.

In addition to the R7.0bn in personal tax relief‚ Gordhan said adjustments to monetary thresholds‚ such as medical tax credits‚ would provide a further R350m of tax relief.

Monthly tax credits for medical scheme contributions will increase to R242 from R230 for the first two beneficiaries and to R162 from R154 for each additional beneficiary‚ with effect from 1 March.

In another move affecting personal taxpayers‚ the Budget Review document said government is looking into the situation of people with multiple sources of income who are often faced with higher than expected tax liabilities on assessment.

Steps being considered include higher levels of withholding by employers‚ holding employees responsible for PAYE at a higher tax rate to take into account the "aggregation effect"‚ SARS informing affected taxpayers and suggesting preventative measures‚ and temporary relief in the case of widows and widowers.

Income tax adjustments

Taxable income and Rates of Tax

R0-R165‚000 18% of each R1

R165‚601 to R258‚750 - R29‚808 + 25% of the amount above R165‚600

R258‚751 to R358‚110 - R53‚096 + 30% of the amount above R258‚750

R358‚111 to R500‚940 - R82‚904 + 35% of the amount above R358‚110

R500‚941 to R638‚600 - R132‚894 + 38% of the amount above R500‚940

R638‚601 and above - R185‚205 + 40% of the amount above R638‚600

Current tax rates

Taxable income Rates of Tax

R0 to R160‚000 - 18% of each R1

R160‚001 to R250‚000 - R28‚800 + 25% of the amount above R160‚000

R250‚001 to R346‚000 - R51‚300 + 30% of the amount above R250‚000

R346‚001 to R484‚000 - R80‚100 + 35% of the amount above R346‚000

R484‚001 to R617‚000 - R128‚400 + 38% of the amount above R484‚000

R617‚001 and above - R178‚940 + 40% of the amount above R617‚000