There was something for everyone in the Taxation Laws Amendment Bill tabled
in parliament on Thursday by Trevor Manuel, the Finance Minister.
Ordinary taxpayers will already have felt the benefit of the massive R9.9
billion package of tax cuts Manuel announced in his February Budget, but
tax experts are still evaluating the possible effects of the controversial
new tax on foreign dividends and the announcement that the South African
Revenue Service (Sars) plans to move from a source to a residence-based tax
system and introduce a capital gains tax (CGT) next year.
The last two changes will bring about major changes in the tax system and
the details will be fleshed out in discussion documents over the next few
months before the planned legislation is finalised.
The bill brings together all tax changes announced over the last year,
including the introduction of a departure tax on international flights, the
withdrawal of Eskom`s tax-exempt status and the streamlining of the tax
status of public benefit organisations.
The introduction of the R100 departure tax has been postponed for three
months to November at the request of the airlines, which will collect it,
so that they can set up the necessary systems. After representations to the
portfolio committee on finance, Manuel will be able to stipulate a lower
tax for flights to neighbouring countries. The unfairness of taxing shorter
flights at the same rate as the longer overseas flights has been pointed
out.
Committee members last week expressed some unease about the tax, which is a
direct violation of the Chicago Convention covering international airlines
and appears to fly in the face of the new drive to make South Africans more
tax compliant. Pravin Gordhan, the Sars commissioner, admitted that he,
too, was ``uncomfortable`` about the tax, but that it had become the norm
rather than the exception internationally and was regarded as a valuable
and legitimate source of revenue for governments. This suggested that the
airlines should reconsider their ban on departure taxes in the convention,
he said.
Apart from the new tax rate structure, the Bill contains a number of tax
relief measures which were also announced in the Budget, the details of
which most of us have probably forgotten already.
Of interest to individuals is the increase in the exemption level for
interest received from R2 000 to R3 000 in the case of people under 65 and
to R4 000 in the case of people over 65 years of age. As interest- bearing
investments such as fixed deposits are often used by low- income earners,
this measure should provide welcome relief. For example, a husband and wife
can, as a unit, earn up to R6 000 tax-free by investing in fixed deposits.