Budget Summary 2024/2025

On 21 February 2024, Honourable Minister of Finance, Enoch Godongwana, delivered the much-anticipated annual budget speech for the 2024/2025 fiscal year, at the National Assembly. The Minister acknowledged the country’s current challenges with Eskom and load shedding being one of the main obstacles to economic growth within the country. However, another serious challenge that the country is facing, is the rising budget deficit. The higher budget deficit implies that debt-service costs in 2023/24 have been revised higher, from R15.7 billion to R356 billion. This means that debt-service costs will absorb more than 20 percent of revenue. To put this into perspective, spending on debt-service costs is greater than the respective budgets for social protection, health, or peace and security. For this reason, Honourable Minister Godongwana said that Government intends to draw down R150 billion from the Gold and Foreign Exchange Contingency Reserve Account (GFECRA). In effect, Government will be using the reserve account to replace more expensive borrowing.

Key Budget Highlights:

Personal Income Tax: Individuals & Special Trusts

Individual tax brackets have not increased for the tax year 1 March 2024 to 28 February 2025 and remain as follows:

Trusts other than special trusts are taxed at a rate of 45%.

Rebates and tax thresholds have not increased for the tax year 1 March 2024 to 28 February 2025 and remain as follows:           

** 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.

Income Tax: Companies

The tax rate for companies with years of assessment ending on or after 1 March 2023 remains at 27%.

Income tax: Small Business Corporations

The tax rates for Small Business Corporations for fiscal years ending on any date between 1 April 2024 and 31 March 2025 are as follows:

Turnover Tax: Micro Businesses

The tax rates for Micro Businesses for fiscal years ending on any date between 1 March 2023 and 29 February 2024 are as follows:

Transfer Duty

There have been no changes in transfer duty. Therefore, there is still no transfer duty payable on property purchases below R1 100 000.

Medical aid tax credits

Medical aid tax credits remain the same at R364 per month for the member and the first dependent, and R246 for any additional dependents.

Retirement Tax

The tax tables for lump sum tax-free retirement and withdrawal payments remain unchanged. The tax-free amount that can be withdrawn at retirement is R550 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. This incentive is set to end in February 2025.

Effective 1 March 2023, individuals who installed rooftop solar panels could 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. The 2024 Budget tabled by Honourable Minister Godongwana has no mention of extending the rooftop solar rebate for individuals, marking the end of the line for the tax break at the end of February 2024.

Retirement Fund – Two-Pot System

As at 01 September 2024, the Revenue Laws Amendment Bill, will introduce a Retirement Fund Two-Pot system into tax laws, which was passed by the National Assembly on 20 February 2024. The Bill will now proceed to the National Council of Provinces for deliberation.

Under the Two-Pot System, a member’s contribution will be split into a one-third (1/3) portion called the “Savings Pot and a two-thirds (2/3) portion called the “Retirement Pot”.

• The “Savings Pot” portion will become available to the member for a single taxable withdrawal before retirement, per tax year. This withdrawal will be subject to a minimum amount and will be taxed at the member’s marginal tax rate.
• The “Retirement Pot” portion will not be allowed to be accessed before a member retires. This amount will be preserved for retirement and must be used to buy a living annuity upon retirement.
  

All Retirement Fund contributions preceding 01 September 2024, will remain as a “Vested Component”. These amounts will be subject to the current retirement fund rules regarding vested rights and the non-vested rights that were brought into effect on 01 March 2021.

Global Minimum Corporate Tax

A proposal of a global minimum corporate tax of at least 15% is to be imposed on multinational corporations with an annual revenue exceeding €750 million, regardless of where their profits are generated.

National Health Insurance (NHI)

Government has re-enforced its commitment to the NHI by allocating R1.4 billion to the Health sector as a NHI grant. A range of system-strengthening activities and further development still need to be undertaken before the NHI can be rolled out successfully.

Electric Vehicle Electric Vehicle Investment Allowance

To encourage the production of electric vehicles in South Africa, government will introduce an investment allowance for new investments, beginning 1 March 2026. This will allow producers to claim 150 per cent of qualifying investment spending on electric and hydrogen-powered vehicles in the first year.

Other 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
• Sugar taxes

For more information on the above and other tax changes, please refer to the comprehensive 2024/2025 PKF taxation guide.

Reetesh Balgobind

Head: Finance