www.jasper.co.za TAX RATE AND THRESHOLD GUIDE – 2006/7

 

 

NEWSFLASH:  PLEASE TAKE NOTE THAT ALL BUSINESSES OR INDIVIDUALS THAT HAVE PREVIOUSLY NOT DECLARED THEMSELVES TO SARS HAVE BEEN GRANTED AMNESTY BY TREVOR MANUEL! COME TALK TO US.

 

NATURAL PERSONS - TAX RATES

Year of assessment ending 28 February 2007

 

Taxable Income (R) Rates of Tax (R)

0 - 100 000 18% of each R1

100 001 - 160 000 18 000 + 25% of the amount above 100 000

160 001 - 220 000 33 000 + 30% of the amount above 160 000

220 001 - 300 000 51 000 + 35% of the amount above 220 000

300 001 - 400 000 79 000 + 38% of the amount above 300 000

400 001 and above 117 000 + 40% of the amount above 400 000

 

NATURAL PERSONS – TAX THRESHOLDS

Below age 65 R40 000

Age 65 and over R65 000

 

NATURAL PERSONS – TAX REBATES

Primary (All natural persons) R7 200

Additional (Persons 65 and older) R4 500

Rebates are reduced proportionally where the period of assessment is less than 12 months.

 

NATURAL PERSONS – PROVISIONAL TAX

The following persons do not have to register for provisional tax:

Below age 65     - Taxable non-employment income of R10 000 or less

Age 65 and over - Annual taxable income consists exclusively of remuneration, interest,

                                dividends or rent from the lease of fixed property and is R80 000 or

                                less

 

NATURAL PERSONS – FOREIGN DIVIDENDS

Most dividends received from foreign entities are taxable. Recognition will be given for foreign tax paid.

 

NATURAL PERSONS - EXEMPTIONS

Interest income and taxable dividends

Below age 65 R16 500

Age 65 and over R24 500

 

Only R2 500 of the above may be applied to foreign interest and foreign dividends Interest earned by non-residents who are absent from South Africa for 183 days or more per annum and who are not carrying on business in South Africa are exempt (criteria applied for residents of common monetary area). Dividends received by a taxpayer are exempt from normal income tax.

 

NATURAL PERSONS - DEDUCTIONS

 

Current pension fund contributions:

The greater of - 7.5% of remuneration from retirement funding employment, or

                         - R1 750

Excess may not be carried forward to the following year of assessment, but will be taken into consideration upon retirement

 

Arrear pensions fund contributions

Limited to - R1 800

Excess carried forward to the following year of assessment.

 

Current retirement annuity fund contributions

The greater of -15% of taxable non-retirement funding employment income, or

                         - R3 500 less current pension fund contributions, or

                         - R1 750.

Excess carried forward to the following year of assessment.

 

Arrear retirement annuity fund contributions Limited to - R1 800

Excess carried forward to the following year of assessment

 

Donations

Qualifying Public Benefit  - Limited to 5% of taxable income before medical

Organisations expense deduction.

 

Subsistence allowances and advances

Accommodation inside Republic:

Meals and incidental costs - R196* per day

Incidental costs only - R60* per day

Accommodation outside

Republic: - $190* per day

Deduction only if person spends at least one night away from usual place of residence for business purposes.

*Subject to change


 

NATURAL PERSONS - DEDUCTIONS  (CONTINUED)

 

Qualifying Medical expenses

Below age 65 Medical scheme contributions above the caps of: up to R500 for

each of the first two persons covered, and R300 for each additional dependant.

·Other medical expenses are limited to the amount exceeding 7.5% of taxable

 income

Below age 65 (Handicapped family members) ·Unlimited

Age 65 and over ·Unlimited

Other deductions available

·Bad debt in respect of salary

·Premiums paid on certain income protection policies

 

NATURAL PERSONS – FRINGE BENEFITS

 

Company cars

Taxable benefit – one vehicle - 2.5% per month of determined value (usually

                                                  the cash cost excluding VAT) of first vehicle

Taxable benefit – many vehicles - 2.5% per month of vehicle with highest

                                                      determined value and 4% per month of

                                                      determined value of additional vehicles

Taxable benefit is reduced in the following cases:

Employee pays all fuel for private use  - 0.22% points

Employee pays all cost for maintenance - 0.18% points

 

Interest-free or low-interest loans

Taxable benefit - Actual interest rate less Official interest rate

Official interest rate - 8% from 1 September 2005

 

Residential accommodation

Taxable benefit  - Greater of formula-based benefit or,

                           - cost to the employer

 

Other fringe benefits

Taxable benefit (in general) ·Value of benefit less Consideration given

 

Only R2 500 of the above may be applied to foreign interest and foreign dividends.  Interest earned by non-residents who are absent from South Africa for 183 days or more per annum and who are not carrying on business in South Africa are exempt (criteria applied for residents of common monetary area).

Dividends received by a taxpayer are exempt from normal income tax

TAX RATE AND THRESHOLD GUIDE – 2006/7

 

COMPANIES – TAX RATES

 

Normal company tax

Financial years ending between 1 April 2006 and 31 March 2007

Type Rate of tax

Companies and close corporations 29%

 

Small business corporations (turnover below R14 000 000)

R0 – R40 000 0%

R40 001 – R300 000 10%

R300 001 and above 29%

 

Employment companies 34%

 

South African branches of foreign resident companies 34%

 

Tax on retirement funds

Gross interest, net rental and foreign dividend income of retirement funds (pension, provident, retirement annuity funds and untaxed policy holder funds of

long-term assurance companies) 9%

 

Secondary tax on companies (STC) 12.5%

- Calculation of STC based on dividends declared less dividends receivable   
  during a cycle.

- South African branches of foreign resident companies are exempt from STC

- With effect from 1 January 2003 liquidation or deregistration dividends declared  
  from capital profits accrued on or after 1 October 2001 are subject to STC.

 

Skills Development Levy

All employers - 1% of the total remuneration paid (exclusions apply)

Employers paying annual remuneration of less than R500 000 are exempt from Skills Development Levies from 1 August 2005. This will apply even if any number of employees is registered for PAYE.

 

Unemployment Insurance Contributions

All employers - 2% of remuneration below a determined amount

Contributions are paid monthly consisting of the 1% contribution by employer and 1% contribution by employee. Employers not registered for PAYE or SDL purposes must pay the contributions to the Unemployment Insurance Commissioner.

 

 

TRUST – TAX RATES

 

Year of assessment ending 28 February 2007:

Type Rate

Trusts 40%

Special trusts Natural person tax rate

Testamentary trusts for benefit of minor children Natural person tax rate

 

TAXATION OF CAPITAL GAINS

Residents and non residents are subject to capital gains tax at the following rates:

Taxpayer Inclusion rate (%) Maximum Effective rate (%)

Individual 25% 10%

Trusts - Special 25% 10%

- Other 50% 20%

Companies - Ordinary 50% 14.5%

Small business corporation 50% 14.5%

Employment company 50% 17%

CGT triggered on:  - Disposal of assets

Disposals include:  - Donation, exchange, loss, death, emigration

Exclusions include: - Disposal of primary residence: R1 500 000

                                    of capital gain/loss

                                 - Death exclusion: R60 000

                                 - Most personal use assets

                                 - Retirement benefits

                                 - Payments in respect of original long-term insurance policies

                                 - R12 500 reduction p.a. on capital gain/loss by individual or
                                   special trust

 

 

OTHER TAXES DUTIES AND LEVIES

 

Transfer Duty

Rates applicable to natural persons acquiring property:

Value of property (R) Rate of tax

0 – 500 000 0%

500 001 – 1 000 000 5% of the value above R500 000

1 000 001 and above R25 000 + 8% of the value exceeding R1 000 000

Rate applicable to other persons: 8% of the value

- Transfer duty is payable on transactions that are not subject to VAT.

- With effect from 13 December 2002 the disposal of shares or members
   interest  in any company or close corporation which owns a residence (subject
   to certain exclusions) will be subject to transfer duty. The above will also apply
   to a residence held by a discretionary trust.

 

Estate Duty

 

All property of South African residents ·20%

South African property of non residents ·20%

Allowable deductions: ·Basic deduction: R2 500 000

- All property accruing to surviving spouse

- Certain liabilities

- Bequests to public benefit organizations

Donations Tax

Value of donation ·20%

Exemptions: ·Donation between spouses

- Donation to certain public benefit organisation

- R50 000 of donation by natural persons

- R10 000 of donation by other persons

 

Value added Tax

Standard rate - 14%

Registration levels applicable based on annual income of taxable goods and services:

Less than R20 000   - Deregistration compulsory

Less than R300 000 - Registration voluntary

More than R300 000- Registration compulsory

More than R30 000 000 - Monthly returns

 

Stamp Duty

Lease agreements of fixed property (exemption for agreements where the duty is less than R500

Registration of transfer and cancellation of unlisted marketable securities (exemption for interest-bearing securities).

Uncertificated Securities Tax

On issue - 1/4 of a per cent

On a change in beneficial ownership of listed ·1/4 of a per cent

securities which are not interest-bearing

Tax on International Air Travel

Per passenger departing on international flights ·R120

Per passenger departing on flights to SACU countries ·R60

RSC Levy

To be abolished from July 2006

 

RESIDENCE BASIS OF TAXATION

With effect from 1 January 2001 residents of South Africa is taxed on their world wide income. Non-residents will be taxed on South African source income. Foreign taxes paid are allowed as a credit to reduce the South African taxes payable.

Resident is defined as:

Individual:     - Any person who is ordinarily resident in the republic

                      - Any person who was physical present in South Africa for

                        >91 days per tax year for 4 consecutive tax years and was physical 
                        present for 549 days in aggregate during the first 3 years
Companies: - Incorporated or effectively managed in South Africa

 

SARS INTEREST RATES

Type Rate (pa)

With effect from 1 September 2005

Fringe benefits - interest-free or low-interest loan 8%

With effect from 1 November 2004

Late or underpayments of tax 10,5%

Refund of overpayments of provisional tax 6,5%

Refund of tax: successful appeal or appeal conceded 10,5%

Refund of VAT after prescribed period 10,5%

Late payments of VAT 10,5%

Customs and Excise 10,5%

TAX CALENDER

VAT ·25th day after the end of the vat period

PAYE ·7th day of each following month

SDL ·7th day of each following month

RSC ·20th day of each following month

STC ·Last day of the month in which the dividend cycle ends

Provisional Tax: Natural Persons

First ·6 months prior to year end (31 August)

Second ·at year end (28 February)

Third ·7 months after year end (30 September)

Provisional Tax: Corporate

(year end other than 28 February)

First ·6 months prior to year end

Second ·at year end

Third ·6 months after year end

If one of the dates fall on a weekend or public holiday payment must be made on the preceding working day.