Your finances and the 2014/2015 SA Budget
How does the latest SA Budget affect you?
At the end of April a third of 2014 will have passed. It went by in a flash and if you still haven’t had time to consider what the 2014/2015 budget means to you and what consequence it will have on your daily life and your pocket, here are some of the highlights.
The SA Budget and Income Tax:
Taxable income – (R) Rates of tax
0 – 174,550 – 18% of taxable income
174,551 – 272,700 – R31,419 + 25% of taxable income above R174,550
272,701 – 377,450 – R55,957 + 30% of taxable income above R272,700
377,451 – 528,000 – R87,382 + 35% of taxable income above R377,450
528,001 – 673,100 – R140,074 + 38% of taxable income above R528,000
673,101 and above – R195,212 + 40% of taxable income above R673,100
The tax-free portion of annual income received was adjusted as follows:
• Under 65 years: R70,700 (previously R67,111)
• 65 to 74 years: R110,200 (previously R104,611)
• 75 years and older: R123,350 (previously R117,111)
The basic interest income exemption remains unchanged at R23,800 and SARS is in the process of implementing the ‘tax-preferred savings account’ system, which is understood to be tax free for the investor. More information was promised to follow in the future for all to have a clearer understanding of the proposal.
• Withdrawing from a Retirement-, Pension- or Provident Fund before retirement age, the first R25,000 will be tax exempt. Thereafter, the current scales will apply. What’s also in the pipeline is the fact that you will have to preserve all or a portion of Provident Fund monies at withdrawal stage. This may be a saving grace for many South Africans as in the past, one was able to withdraw all the cash from any of the listed funds earlier than retirement, and this premature access has been a huge factor to elderly people living in lack.
• For the diligent savers to provide for the autumn years, there was good news. After 1 March 2014 when retiring from these funds, the first R500,000 will be exempted from tax . Government is serious about supporting citizens to provide for their own retirement.
• Your income protection contributions will not be tax deductible any more, but if you do claim, the benefit will be.
• From 1 March 2015, the tax privilege for Pension-, Provident- and Retirement Funds will be as follows:
– A deduction equal to 27.5% of taxable monthly income, to the maximum of R350,000 per year, in total from all of these funds, will be allowed.
– Your employer’s contribution will be reckoned as a fringe benefit from next year.