How taxes will change after the 2021 Budget

I have no doubt that 5 people in the same room would have 5 different views on the 2021 Budget Speech.

The reality remains that South Africa owes a lot of people a lot of money and simply raising taxes will not solve that problem. Raising taxes could further erode the current tax base in a country where fewer than 14 million individuals in a working-age population of 39 million are registered tax payers and where those earning more than R1 million a year pay 40.2% of all personal income levies.

Sadly, for every high-net worth person who emigrates an average of R1.2 million in income taxes disappears from the system and with that the spending, VAT and economic activity they generate.

So let’s see how taxes will change and how it will affect us in the upcoming tax year.

Individuals

Individuals will welcome the average 5% increase in personal income tax brackets. This means all tax payers will pay proportionally less tax.

What would the result be on our pockets?

Taxable income	Annual Saving in Rands	% saving	Monthly saving
100 000	R756	25% less than last year	R63
750 000	R4,500	2% less than last year	R375
2 000 000	R8,300	1% less than last year	R690

Individual income tax rates and bracket adjustments:

2022 tax year (1 March 2021 – 28 February 2022) – * changes from previous year

​Taxable income (R)	​Rates of tax (R)
1 – 216 200	18% of taxable income
216 201 – 337 800	38 916 + 26% of taxable income above 216 200
337 801 – 467 500	70 532 + 31% of taxable income above 337 800
467 501 – 613 600	110 739 + 36% of taxable income above 467 500
613 601 – 782 200	163 335 + 39% of taxable income above 613 600
782 201 – 1 656 600	229 089 + 41% of taxable income above 782 200
1 656 601 and above	587 593 + 45% of taxable income above 1 656 600

Tax Thresholds – * changes from previous year 

​            Age	​​ Tax Year​
	2022​	​2021	2020​
Under 65	​R87 300	​R83 100	​R79 000
​65 an older	​R135 150	​R128 650	R​122 300
​75 and older	​R151 100	​R143 850	​R136 750

Tax Rebates – * changes from previous year

Tax Rebate​​	​ Tax Year
	​2022	2021​	​2020
​Primary	​R15 714	​R14 958	​R14 220
​Secondary (65 and older)	​R8 613	​R8 199	R7 794
​Tertiary (75 and older)	​R2 871	​R2 736	​R2 601

 

Sin taxes

Sin taxes will be lamented by smokers and those who enjoy an alcoholic beverage.

Excise duties on alcohol and tobacco will increase on average by 8%. The result on our pockets will be:

• Tax on beer will increase from 181c on a 340ml can, to 196c
• Wine will go up from R4.39 a litre to R4.74 a litre
• Fortified wine goes up from R7.34 to R7.92 a litre
• Sparkling wine goes up from R14.36 to R15.51 a litre
• Ciders and alcoholic fruit beverages increase from 181c to 196c for a 340ml can
• Spirits are up from R68.73 to R74.23 a bottle
• But traditional African beer will remain unchanged at 7.82c a litre.
• Cigarettes tax will increase from R17.40 for a pack of 20, to R18.79.

Treasury notes that the World Health Organisation believes that at least 70% of cigarette prices should be go towards government tax. In South Africa, the tax rate is still only at 40% of retail selling price. It also cited a 2019 WHO estimate that SA’s cigarettes were more affordable in 2018 than in 2008.

On vaping and other heated tobacco products, the excise tax rate (75% of the rate applied to a pack of cigarettes) will remain unchanged.

 

Corporate Taxes

For now, the corporate income tax rate remains unchanged at 28%.

There has however been a commitment to reducing the rate over the medium term. The corporate income tax rate will be lowered to 27% for companies with years of assessment commencing on or after 1 April 2022.

 

VAT

Value-added tax remains unchanged at 15%.

 

Small Business Corporations (SBC) – * changes from last year

There was a very slight adjustment on the first 2 tiers of the tax table which will result is a total saving of R294.

Financial years ending on any date between 1 April 2021 and 31 March 2022:

​Taxable Income (R)	​Rate of Tax (R)
1 – 87 300	​0% of taxable income
​87 301 – 365 000	​7% of taxable income above 87 300
​365 001 – 550 000	​19 439 + 21% of taxable income above 365 000
​550 001 and above	​58 289 + 28% of the amount above 550 000

 

Sources:

South Africa Revenue Services (SARS)

Business Insider South Africa