Budget 2022 highlights
Below is a summary of the highlights of the budget speech.
Personal tax
SARS has not increased personal tax but adjusted the personal income tax bracket, for example while the maximum marginal rate for natural persons remains at 45% and is reached when taxable income exceeds R1 731 600.00, the minimum rate of tax remains at 18% on taxable income not exceeding R226 000.00.
The primary rebate for all natural persons has been increased to R16 425.00 (previously R14 958.00), and an additional R9 000.00 (from R8 199.00) for persons between 65 and 75 and over 75 a further R2 997.00 (previously R2 736.00).
The individual tax thresholds referred to above have been amended as follows:
In other words, the personal income tax brackets and rebates have been adjusted for inflation (4.5%).
The medical tax credit has been increased from R332.00 to R347.00 per month for each of the first two dependents and from R224.00 to R234.00 for every subsequent dependent.
All provisional tax payers with assets above R50 million will be required to declare specified assets and liabilities at market values in future.
No changes have been made to the retirement fund lump sum withdrawal benefits or the retirement fund lump sum benefits or severance benefits.
Employment tax incentive
The value of the employment tax incentive increased by 50%, mainly in an attempt to address youth unemployment.
Corporate income tax
As one of the means of restructuring corporate income tax, corporate income tax rate has been reduced by 1% to 27%. This is mainly to make South Africa a more competitive investment destination to attract foreign investment, thereby supporting economic growth.
Sin taxes
The proposed increase in excise duties on liquor is 4.5 – 6.5% and tobacco products 5.5 – 6.5%. Vaping is also being considered in this category.
The health promotion levy (sugar) for beverages containing more than 4g of sugar per 100 ml will be increased to2.31c/g from 1 April 2022.
Carbon tax
In keeping with its commitments made in terms of the Paris Climate Change Agreement, the carbon tax rates will increase from R134.00 per ton of carbon dioxide to R144.00 per ton.
Plastic bag tax
An inflationary increase will be applied to the plastic bag levy from25c to 28c a bag from 1 April 2022 to further discourage consumers from buying plastic bags and to support re-use and recycling.
Exchange control and foreign exposure limits
The foreign exposure limits for all insurance, retirement and savings funds has been increased to 45% inclusive of the 10% African allowance. The scope for investors to diversify their retirement assets globally has therefore increased.
General fuel levy and Road Accident Fund
No increase.
VAT
No increase in the VAT rate.