Budget Speech 2023/2024
Monday, 06 March 2023
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Posted by: Strinivasen Rajgopaul
Budget Speech 2023/2024 “It is a budget that makes tough trade-offs in the interests of the country’s short and long-term prosperity.” - Honourable Minister of Finance Enoch Godongwana On Wednesday 22nd February 2023, Honourable Minister of Finance Enoch Godongwana, delivered the much-anticipated annual budget speech for the 2023/24 fiscal year, at the National Assembly. The Minister acknowledged the country’s current challenges with Eskom and load shedding being the main obstacle to economic growth within the country. With record high levels of load shedding in 2022 (201 days) as compared to 2021 (75 days), the Minister proposed a total debt-relief arrangement for Eskom of R254 billion. In addition, Government have introduced tax incentives to encourage businesses and individuals to invest in renewable energy, thereby reducing the demand on Eskom’s supply capacity.
Whilst many South Africans expected the worst from the budget, the good news is that there will be no radical tax changes. However, high inflation levels and challenging economic times continue to impact every South African’s pocket.
Key Budget Highlights:
Personal Income Tax: Individuals & Special Trusts
The individual tax brackets have been increased by 4.9% for the tax year 1 March 2023 to 29 February 2024 as follows:
Taxable income (R) | Rate of tax (R) | 1 – 237 100 | 18% of taxable income | 237 101 – 370 500 | 42 678 + 26% of taxable income above 237100 | 370 501 – 512 800 | 77 362 + 31% of taxable income above 370500 | 512 801 – 673 000 | 121 475 + 36% of taxable income above 512800 | 673 001 – 857 900 | 179 147 + 39% of taxable income above 673000 | 857 901 – 1 817 000 | 251 258 + 41% of taxable income above 857900 | 1 817 001 and above | 644 489 + 45% of taxable income above 1 817000 |
Trusts other than special trusts are taxed at a rate of 45%. Rebates and tax thresholds have been increased by 4.9% for the tax year 1 March 2023 to 29 February 2024 as follows:
Category | Rebates | Tax Threshold ** | Primary <65 years old | R 17 235 | R95 750 | Secondary 65 to 75 years old | R9 444 | R 148 217 | Tertiary >75 years old | R3 145 | R 165 689 |
** Taxpayers earning less than these thresholds will pay no income tax.
Interest Exemption
The interest exemption thresholds remain as follows:
- R 23 800 per annum for taxpayers under the age of 65 years, and
- R 34 500 per annum for taxpayers aged 65 years and older.
No Tax Changes There were no tax changes for the following:
- Fuel levy
- Road Accident Fund levy
- Capital Gains Tax
- Dividends tax
- Estate duty and donations tax
- Value Added Tax (remains at 15%)
- Tax-free savings account
- Levies on plastic
- Sugar taxes
- Health Promotion Levy
Income Tax: Companies
The tax rate for companies with years of assessment ending on or after 31 March 2023 is 27%.
Income tax: Small Business Corporations
The tax rates for small business corporations for financial years ending on any date between 1 April 2023 and 31 March 2024 are as follows:
Taxable income (R) | Rate of tax (R) | 1 – 95 750 | 0% of taxable income | 95 751 – 365 000 | 7% of taxable income above 95 750 | 365 001 – 550 000 | 18 848 + 21% of taxable income above 365 000 | 550 001 and above | 57 698 + 27% of taxable income above 550 000 |
Turnover Tax: Micro Businesses
The tax rates for micro businesses for financial year ending on any date between 1 March 2023 and 29 February 2024 are as follows:
Taxable income (R) | Rate of tax (R) | 1 – 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 |
Transfer Duty
Transfer duty brackets have been increased by 10%. Therefore, no transfer duties will be payable on property purchases lower than R 1 100 000.
Medical aid tax credits
Medical aid tax credits will be increased from R 347 to R 364 per month for the member and first dependent and from R 234 to R 246 per month for any additional dependents. No information regarding the roll-out of the National Health Insurance was published.
Retirement Tax
The tax tables for lump sum tax-free retirement and withdrawal payments increased by 10%.The tax-free amount that can be withdrawn at retirement, increases from R 500 000 to R 550 000. Renewable energy tax incentive
Effective 1 March 2023, businesses will be able to claim a deduction of 125% of the cost of an investment in renewables, within the first year of bringing it into use. Effective 1 March 2023, individuals who install rooftop solar panels can claim a rebate of 25% of the cost of the new/unused panels, brought into use for the first time in the period 1 March 2023 to 29 February 2024, capped to a maximum of R 15 000 per individual. The cost excludes the cost of inverters and batteries.
Retirement Fund – Two-Pot System
The first phase of legislative changes to the retirement fund system is due to be published on 1 March 2024. The aim of these changes is to allow pre-retirement accessibility to a portion of one’s retirement savings. These withdrawals would be taxed as income in the year of the withdrawal.
Retirement fund contributions will remain deductible up to R 350 000 per year or 27.5 % of taxable income per year – whichever is lower. Permissible withdrawals from funds accrued before 1 March 2024 will be taxed according to the lump sum tables.
For more information on the above and other tax changes, please refer to the comprehensive 2023/2024 PKF taxation guide.
Reetesh Balgobind Assistant Finance Manager
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