Taxpayers across the board will benefit from the R8.3 billion income tax concession in the 2001 Budget.
Although the income tax cuts offer the most relief for people earning less than R80 000, there is something for all taxpayers.
Finance Minister Trevor Manuel has cut income tax in two ways:
* By raising the primary rebate from R3 810 to R4 140 for people under 65 and from R2 900 to R3 000 for people over 65; and
* By stretching the tax brackets.
People under 65 who earn less than R23 000 will not pay any income tax at all. Nor will people over 65 who earn less than R39 154.
If you earn R50 000 a year, you will save R880 in tax this year; if you earn R80 000 you will save R2 480 and if you earn R100 000 or more you will save R3 080.
"Before this year's tax proposals, we have put R25 billion back into the pockets of individuals. Today, we give more back," Manuel said.
He didn't change the marginal tax rates, as some had hoped he would.
But he did raise the threshold at which the top marginal rate of 42 percent kicks in, from R200 001 to R215 001.
Good news for people whose income is derived partly from interest is another rise in the tax-free ceiling.
Last year, Manuel raised the limit on tax-free interest and dividend income from R2 000 to R3 000 for taxpayers under 65 and to R4 000 for taxpayers over 65.
This year he has raised the limit by another R1 000 to R4 000 for taxpayers under 65 and R5 000 for taxpayers over 65. Altogether, the change in the limits will save taxpayers R160 million this year, the National Treasury estimates.
He has also raised the provisional tax thresholds. Until now, if you were under 65 you had to register as a provisional taxpayer if you earned income of more than R1 000 a year from any source other than your job.
Now you will only have to register if you earn more than R2 000.
People over 65 have been exempt from paying provisional tax if their income did not exceed R50 000; this has now been raised to R80 000 a year. This, the Treasury says, will cost the state R20 million this year.
A further R50 million will be saved by taxpayers through cuts in donations tax and estate duty from 25 percent to 20 percent.
These cuts are intended to ease the burden of taxpayers who will be hit by the introduction of capital gains tax in October this year.
Once capital gains tax has been introduced, if you donate an asset or if you die, the tax authorities regard your asset as having been realised and liable for capital gains tax. So when the ownership of your asset passes from you to another taxpayer, the capital gain over the life of the asset is taxable.
(In the United States, where capital gains are not taxed on death, taxpayers have an incentive not to sell an asset during their lifetimes. This so-called "lock-in" effect is estimated to have lost the US treasury up to 50 percent of potential tax revenue.)
Tax TablesHOW TO CALCUATE YOUR TAXHow to calculate your tax for 2000/01 from the new tax tables:
Your total income (excluding income from capital growth)RLESS: Exempt income - mainly the first R4 000 (or R5 000 for those over 65 years of age) of interest earningsRLESS: Allowable deductions (for example entertainment)RTOTAL (This is called your taxable income)RLook up the tax you will pay using the tax tables belowRLess the rebateRTotal tax owing
R
Income Tax for people younger than 65
Taxable income (R)
2000 rates (R)
2001 rates (R)
reduction (R)
22 000160-16023 000340-34024 00052018034025 00070036034026 00088054034027 0001 06072034028 0001 24090034029 0001 4201 08034030 0001 6001 26034035 0002 5002 16034040 0003 8003 22058045 0005 1004 52058050 0006 7005 82088055 0008 3007 1201 18060 0009 9008 7201 18065 00011 75010 3201 43070 00013 60011 9201 68080 00017 60015 1202 48090 00021 60018 8202 780100 00025 60022 5203 080120 00033 60030 5203 080150 00045 60042 5203 080200 00065 60062 5203 080300 000107 600104 2203 380400 000149 600146 2203 380500 000191 600188 2203 380600 000233 600230 2203 380700 000275 600272 2203 380800 000317 600314 2203 380900 000359 600356 2203 3801 000 000401 600398 2203 380Income Tax for people aged 65 and older
Taxable income (R)
2000 rates (R)
2001 rates (R)
reduction (R)
40 00090022068045 0002 2001 52068050 0003 8002 82098055 0005 4004 1201 28060 0007 0005 7201 28065 0008 8507 3201 53070 00010 7008 9201 78080 00014 70012 1202 58090 00018 70015 8202 880100 00022 70019 5203 180120 00030 70027 5203 180150 00042 70039 5203 180200 00062 70059 5203 180300 000104 700101 2203 480400 000146 700143 2203 480500 000188 700185 2203 480600 000230 700227 2203 480700 000272 700269 2203 480800 000314 700311 2203 480900 000356 700353 2203 4801 000 000398 700395 2203 480
MARGINAL TAX
South Africa has a progressive tax system - the more you earn the more you pay. With the new tax scales, you will pay 18 cents in every rand for the first R38 000 you earn in a year. If you earn more than R38 000 but less than R55 000 you will pay 26 cents for every rand you earn above R38 000, but the first R38 000 you earn is still taxed at 18 cents in every rand. Each income bracket is blocked off. You only pay more tax on the income that falls in the next bracket up. This means in nominal terms (without taking inflation into account) you never earn less as you go up the income steps.
TAX RATES FOR THE YEAR 2001/02Taxable income in (R)
Rates of tax
0 - 38 00018% of each R138 001 - 55 000R6 840 + 26% of the amount above R38 00055 001 - 80 000R11 260 + 32% of the amount above R55 00080 001 - 100 000R19 260 + 37% of the amount above R80 000100 001 - 215 000R26 660 + 40% of the amount above R100 000215 001 and aboveR72 660 + 42% of the amount above R215 000Rebates of tax
PrimaryR4 140Secondary (for people over 65)R3 000Tax threshold
Below age 65R23 000Age 65 and overR39 154