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BUDGET SUMMARY 2011

Once more, income tax rates have been adjusted in favour of the lower to medium income brackets.

The following table illustrates the major changes that are proposed in the budget:

Personal income tax rate and bracket adjustments, 2010/11 and 2011/12

2010/2011		2011/2012
Taxable income (R) Rates of tax		Taxable income (R) Rates of tax
0-140 000	18% of each R1	0-150 000	18% of each R1
140 001-221 000	R 25200+25% of the amount above R140 000	150 001-235 000	R 27000+25% of the amount above R150 000
221 001-305 000	R 45450+ 30% of the amount above R221 000	235 001-325 000	R 48250+ 30% of the amount above R235 000
305 001-431 000	R 70650 + 35% of the amount above R305 000	325 001-455 000	R 75250 + 35% of the amount above R325 000
431 001-552 000	R 114750+ 38% of the amount above R431 000	455 001-580 000	R 120750+ 38% of the amount above R455 000
552 001 and above	R 160730+ 40% of the amount above R552 000	580 001 and above	R 168250+ 40% of the amount above R580 000
Rebates		Rebates
Primary	R 10 260	Primary	R 10 755
Secondary	R 5 675	Secondary	R 6 012
		Tertiary	R 2 000
Tax threshold
Below age 65	R 57 000	Below age 65	R 59 75 0
Age 65 and over	R 88 528	Age 65 and over	R 93 150
		Age 75 and over	R 104 261
Interest Exemption
Below age 65	R 22 300	Below age 65	R 22 800
Age 65 and over	R 32 000	Age 65 and over	R 33 000

Other proposals and possibilities

· Employers’ contributions to retirement annuities on behalf of employees are to be treated as a fringe benefit w.e.f. 1 March 2012. Individuals will be permitted to deduct up to 22.5% of their taxable income in respect of contributions to pension, provident or retirement annuity funds, subject to a minimum annual deduction of R 12000 and a maximum deduction of R 200 000.

· Medical scheme capped amounts up from R670 to R720 for the first two beneficiaries and from R410 to R440 for each additional beneficiary. These monthly deductions are to be converted to tax credits w.e.f. 1 March 2012. Details of this change to be announced in due course. Further details of the National Health Insurance Scheme and of how it will be funded to be introduced in the 2012 budget .

· Lump sum withdrawals from pensions and provident funds are to be subjected to the same one-third limitation that is applied to retirement annuity funds.

· Tax free lump sum benefit upon retirement to be increased from R 300 000 to R 315 000. The graduated scale of rates in respect of the taxation of lump sums retirement or involuntary retrenchment is to be modified.

· From 1 March 2011, the following exclusions will apply to capital gains:

- Annually R 20 000

- On death R 200 000

- Disposal of small business by persons over 55 years R 900 000

· With effect from 1 April 2012, all winnings from gambling in excess of R 25k will be subject to a 15% withholding tax.

· Also, with effect from 1 April 2012, dividend tax will replace the existing Secondary Tax on Companies (STC) .

· A revised rate structure of transfer duty will be introduced from 23 February 2011. This scheme increases the transfer duty exemption to R 600 000 and provides for a more favourable rate scale.

· As usual, smokers and drinkers will have to make an increased contribution to the welfare of the general population .

· Motorist too will be penalised with an addition of 10c per litre to the fuel levy and between 8c and 80c per litre contribution to the Road Accident Fund (RAF). These increases to be effective 6 April 2011.

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