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National Treasury’s budget Speech 2017/2018

Minister of Finance, Mr Pravin Gordon, delivered the National Treasury’s budget for 2017/2018.

SAFRICA-BUDGET-GORDHAN-18-02-2016-10-02-18-468
The following amendments stand out:

  • Super Tax Bracket (Individuals) – 45% on income above R1,500,000 p.a.
  • Trust Tax Rate increased to 45% (from 41%)
  • Increase to Effective rate of Capital Gains tax for Trusts / Super Tax Bracket
  • Dividends Tax increased to 20% (from 15%)
  • Withholding Tax for non-resident sellers of fixed property increased to 7.5%, 10% and 15% respectively (from 5%, 7.5% and 10%)
  • The value at which property is taxed at 0% is increased from R750 000 to R900 000.

A new bracket of “Super Tax” has been introduced on personal income that levies tax at 45% on income exceeding

R1,500,000 per annum. This increases the effective rate on capital gains above this level to 18% (from 16.4%).

The increase in the Trust tax rate to 45% increases the effective rate of CGT for trusts to 36% (from 32.8%).
 
To sumarise: The effective tax rate of a company is now at 42.4% (after dividend tax has been paid). Therefore, it is still more beneficial to purchase property through a company than directly through a trust with an increased tax rate of 45%. – Our “hybrid” system of registering a trust and company simultaneously is still attractive!!!

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