TAX PROPOSALS

National TreasuryDepartment:

REPUBLIC OF SOUTH AFRICA

national treasury

BUDGET AT A GLANCE

MACROECONOMIC OUTLOOK SUMMARY

Percentage Change2014 2015 2016 2017

Estimate Forecast

Household consumption 1.2 2.0 2.6 0.3

Capital formation -0.6 2.2 3.4 8.3

Exports 3.3 9.0 4.6 0.5

Imports -0.3 4.6 5.5 3.5

Gross domestic product 1.4 2.0 2.4 0.3

CPI 1.6 4.3 9.5 5.7

Balance of payments current account (percentage of GDP)

-5.8 -4.5 -4.9 -5.2

CONSOLIDATED GOVERNMENT FISCAL FRAMEWORK

2014/15 2015/16 2016/17 2017/18

R billion/percentage of GDP

Revised estimate

Medium-Term Estimates

Revenue 1 091.0 1 188.9 1 331.5 1 439.5

Percentage of GDP 28.1% 28.4% 29.3% 29.2%

Expenditure 1 243.4 1 351.0 1 448.8 1 561.7

Percentage of GDP 32.0% 32.2% 31.9% 31.7%

Budget balance -152.4 -162.2 -117.3 -122.2

Percentage of GDP -3.9% -3.9% -2.6% -2.5%

Gross domestic product 3 879.9 4 191.8 4 538.8 4 926.1

CONSOLIDATED GOVERNMENT EXPENDITURE BY FUNCTION, 2014/15 2017/18

2014/15 2015/16 2016/17 2017/182014/15– 2017/18

R billion Revised estimate Medium-term estimates

Average annual growth

Basic education 189.5 203.5 216.0 227.8 6.3%

Health 144.6 157.3 167.5 177.5 7.1%

Defence, public order and safety

163.0 171.2 181.2 192.7 5.7%

Post-school education and training

56.6 62.2 65.6 69.6 7.1%

Economic affairs 189.4 206.2 219.5 225.5 6.0%

Local development and social infrastructure

176.6 199.6 210.2 223.8 8.2%

General public services 64.7 64.4 66.8 69.8 2.6%

Social protection 143.9 155.3 166.0 176.5 7.0%

Allocated expenditure

8.292 1 6.912 1 4.821 1 %5.6 4.363 1

Debt-service costs 115.0 126.4 141.0 153.4 10.1%

Unallocated reserves – 5.0 15.0 45.0 –

Consolidated expenditure

4.342 1 8.844 1 0.153 1 %9.7 7.165 1

P.T.O

TAX REVENUE 2015/16

Fuel levies5.1%

Customs and excise duties7.0%

VAT26.2%

Other6.6%

Corporate income tax18.7%

Personal income tax36.4%

A budget deficit of 3.9 per cent of GDP is expected for 2014/15, narrowing to 2.5 per cent in 2017/18.• Debt stock as a percentage of GDP is expected to stabilise at 43.7 per cent in 2017/18.• The main budget non-interest expenditure ceiling has been reduced by R25 billion over the next two years.• Increases in personal income tax rates and the general fuel levy are set to add R16.8 billion to gross tax revenue in 2015/16.• Any additions to personnel headcount for 2015/16 and 2016/17 will bepaid for from existing allocations.• Real growth in non-interest spending will average 2.1 per cent over thenext three years and will be more closely aligned to long-term averagereal GDP growth from 2017/18.• Capital remains the fastest-growing item of non-interest spending over themedium term, with compensation and goods and services growing slowest.

SPENDING PROGRAMMES

Over the next three years, government will spend:• An addition 7.9 per cent per year, increasing expenditure from R1.24 trillion in 2014/15 to R1.56 trillion in 2017/18.• At least 60 per cent of non-interest expenditure to improve social services and alleviate poverty.• R647 billion on basic education, including R36.7 billion on school infrastructure.• R634 billion on local development and social infrastructure, including R145.5 billion on municipal infrastructure.• R502 billion on health, with R46.6 billion on the HIV and AIDS conditional grant.• R498 billion social protection.• R197 billion on post-school education and training.• R18 billion on providing free meals to over 9 million learners.

BUDGET FRAMEWORK

• A budget deficit of 3.9 per cent of GDP is expected for 2014/15, narrowing to 2.5 per cent in 2017/18.• Debt stock as a percentage of GDP is expected to stabilise at 43.7 per cent in 2017/18.• The main budget non-interest expenditure ceiling has been reduced by R25 billion over the next two years.• Increases in personal income tax rates and the general fuel levy are set to add R16.8 billion to gross tax revenue in 2015/16.• Any additions to personnel headcount for 2015/16 and 2016/17 will be paid for from existing allocations.• Real growth in non-interest spending will average 2.1 per cent over the next three years and will be more closely aligned to long-term average real GDP growth from 2017/18.• Capital remains the fastest-growing item of non-interest spending over the medium term, with compensation and goods and services growing slowest.

NATIONAL BUDGET 2015

ConsolidatedGovernment expenditureR1.35 TRilliON | 8.7%

soCial serviCesR777.9 billiON | 9.4%

national treasury: BudGet 2015 HiGHliGHts | Percentagesreflectgrowthrelativeto2014/15estimatedoutcome

r72.3bn | 5.8%Economic infrastructure and network regulation

r69.7bn | 7.8%Industrial development, trade and innovation

r64.1bn | 13.6%Employment, labour affairs and social security funds

r191.1bn | 7.6%Basic education

r26.2bn | 8.6%University transfers

r25.3bn | 15.3%Skills development and adult education

r13.1bn | -0.3%Education administration

r10bn | 8.2%National Student Financial Aid Scheme

r66.7bn | 7.6%District health services

r30.2bn | 6.3%Provincial hospital services

r26.4bn | 18.2%Other health services

r25.9bn | 5.9%Central hospital services

r8.1bn | 9.7%Facilities management and maintenance

r53.5bn | 8.4%Old-age grant

r47.8bn | 10.2%Child support grant

r20.2bn | 6.6%Disability grant

r16.7bn | 9.1%Provincial social development

r8.5bn | -2.5%Other grants

r65.2bn | 12.9%Municipal equitable share and infrastructure grant

r49.3bn | 13.2%Human settlements, water and electrification programmes

r33.1bn | 12.4%Other local development and social infrastructure

r10.7bn | 4.8%Rural development and land reform

r41.3bn | 15.8%Public transport

r8.5bn | 4.8%Policy oversight and grant administration

r38.6bn | 4.2%General public administration and fiscal affairs

r12.3bn | -0.3%Executive and legislative organs

r7.1bn | -5.8%External affairs and foreign aid

r6.3bn | -18.4%Home affairs

r49.4bn | 4.0%

r39.1bn | 4.6%

r82.7bn | 5.7%Police services

Defence and state security

Law courts and prisons

economicaffairs r206.2bn

8.8%

defence, puBlic

order and safety

r171.2bn

5.0%

deBt-service

costs r126.4bn

9.9%

general puBlic

services r64.4bn

-0.6%

education r265.7bn

8.0%

health r157.3bn

8.8%

social protection

r155.3bn

7.9%

local development

and social infra-

structure r199.6bn

13.0%

PERSONAL INCOME TAX

TRANSFER DUTY

SIN TAXES

FUEL AND ROAD ACCIDENT FUND LEVIES SMALL BUSINESS TAX

4

HOW PERSONAL INCOME TAX CHANGES AFFECT YOU?

TRANSFER DUTY RELIEF

RISE IN TOBACCO AND ALCOHOL EXCISE DUTIES

INCREASE IN THE GENERAL FUEL AND ROAD ACCIDENT FUND LEVIES

MORE BENEFITS FOR MICRO BUSINESS

The 2015 Budget provides some changes to personal income tax, including

adjustments to tax brackets and rebates to provide relief from the effect of inflation. This Budget sees an increase in marginal tax rates for individuals earning more than R181 900 and an increase in medical tax credits.

The 2015 budget also provides homebuyers in middle income households relief on transfer

duties. From 1 March 2015, transfer duty will be eliminated on all property acquired up to R750 000. In addition there will be a decrease on transfer duty for properties acquired

Excise duties on alcoholic beverages (particularly beer, sparkling wine and spirits) will increase by between 4.8 and 8.5 per cent. The increases in excise duties are as follows:

The general fuel levy and the Road Accident Fund levy will increase by 30.5c per litre and 50c per litre respectively from 1 April 2015.

This will push up the general fuel levy to R2.55 per litre of petrol and to R2.40 per litre of diesel.

Individual taxpayers who earn below R500 000 a year will benefit from tax relief.

The amount an individual can earn before they are required to pay tax has been adjusted for the tax year that runs from 1 March 2015 to 29 February 2016 as follows:

up to around R2.6 million and an increase in transfer duty payable for properties above R2.6 million. Transfer duty rates applying to property acquired on or after 1 March 2015 by any person (including companies, close corporations or trusts) are as follows:

The new tax thresholds are due to increases in tax rebates for individual taxpayers:

TAX THRESHOLDS TAX YEAR: 2014/15 TAX YEAR: 2015/16 Below age 65 R70 700 R73 650

Age 65 to 74 R110 200 R114 800

Age 75 and over R123 350 R128 500

TAX REBATES TAX YEAR: 2014/15 TAX YEAR: 2015/16 Primary (for all taxpayers) R12 726 R13 257

Secondary (aged 65 and over) R7 110 R7 407

Tertiary (aged 75 and over) R2 367 R2 466

Tax payable for the tax year ending 29 February 2016.

TAXABLE INCOME OF INDIVIDUALS (R) TAX PAYABLE (R)

0 to 181 900 18% of taxable income

181 901 to 284 100 32 742 + 26% of taxable income above 181 900

284 101 to 393 200 59 314 + 31% of taxable income above 284 100

393 201 to 550 100 93 135 + 36% of taxable income above 393 200

550 101 to 701 300 149 619 + 39% of taxable income above 550 100

701 301 and above 208 587 + 41% of taxable income above 701 300

Trusts other than special trusts Rate of tax 41%

This year micro business enjoys the benefit of reduced tax rates for turnover tax.

Taxable turnover (R) Rates of tax (R)0 – 335 000 0% of taxable turnover

335 001 - 500 000 1% of taxable turnover above 335 000

500 001 - 750 000 1 650 + 2% of taxable turnover above 500 000

750 001 and above 6 650 + 3% of taxable turnover above 750 000

VALUE OF PROPERTY RATER0 – R750 000 0%

R750 001 – R1 250 000 3% on the value above R750 000, but not exceeding R1 250 000

R1 250 001 – R1 750 000 R15 000 plus 6% on the value above R1 250 000, but not exceeding R1 750 000

R1 750 001 – R2 250 000 R45 000 plus 8% on the value above R1 750 000, but not exceeding R2 250 000

R2 250 001 and aboveR85 000 plus 11% on the value above R2 250 000

THE NEW TAX RATESINCREASES BY:

Malt beer 7c per 340ml can

15c per 750ml bottle

19c per 750ml bottle

Sparkling wine 48c per 750ml bottle

Ciders and alcoholic fruit beverages 7c per 330ml bottle

Spirits R3.77 per 750ml bottle

Cigarettes 82c per packet of 20

Cigarette tobacco 91c per 50g

Pipe tobacco 26c per 25g

Cigars R3.09 per 23g

2015 BUDGETT A X P R O P O S A L S

// Source National Treasury