Budget 2022 | Tax relief, sin tax and debt – here’s everything you need to know

This has been a surprisingly tax-friendly budget, thanks to tax collection significantly exceeding expectations.

Tax revenue collections for 2021/22 are expected to exceed last year’s Budget estimate by R181.9 billion.

While much of this windfall has gone to debt reduction, the Covid-19 relief grants and funding losses in the KwaZulu-Natal riots, it has allowed government to provide R5.2 billion in tax.

This is what you need to know:

Your taxesNo increase in fuel levy. This is the first time since 1990 that the fuel levy and Road Accident Fund levy have not increased.

No fuel tax. It’s a much-needed relief for motorists who will not face the usual fuel tax hike in April. However, the carbon tax on fuel will increase by 1c per litre on April 6. This will bring the total taxes and levies per litre of fuel to R6.16 on petrol and R6.02 on diesel. This equates to around a third of the current fuel cost.

No income tax increases. There will be an inflation adjustment to the personal income tax brackets and rebates of 4.5%. This means anyone receiving a salary increase of 4.5% would not pay more tax. It also means you can earn R91 250 a year before paying tax.

Corporate tax rate drops from 28% to 27% from March 31 2022. This will be offset by the restriction of the use of assessed losses. The offsetting of the balance of assessed losses will be limited to 80% of taxable income. This means companies with assessed losses equal or exceeding their current year taxable income will still have to pay tax on 20% of their taxable income.

Usual sin taxes. Excise duties have increased by between 4.5% and 6.5%. A bottle of wine will cost 17c more, beer 11c more per can and a pack of cigarettes increases by R1.03. This will collect an extra R500 000 million rand for the fiscus.

Medical tax credits increase. The usual inflation adjustment to medical tax credit will increase credit from R332 to R347 per month for the first two members and from R224 to R234 for additional members.

Plastic bag tax increases from 25c/bag to 28c/bag.

Your investments

No increase in the contribution limits to tax-free savings accounts (TFSA). This is disappointing as TFSAs are a great mechanism to encourage savings. The TFSA annual contribution limit remains R36 000 with a lifetime limit of R500 000.

No updates on retirement reforms or early access to retirement funds. The National Treasury issued a paper late last year entitled Encouraging SA Households to Save More for Retirement. It made recommendations around a two-bucket system that would allow for partial access to retirement funds prior to retirement combined with compulsory preservation. This document is still out for public comment. It is very unlikely there will be any announcement this year that will allow retirement fund members immediate access to retirement funds.

Suggestions of a possible wealth tax. The Treasury is requiring all provisional taxpayers with assets above R50 million to declare specified assets and liabilities, at market values, in their tax returns next year. While the Treasury says “this is to assist with the detection of non-compliance or fraud through the existence of unexplained wealth”, this additional information will also “help in determining the levels and structure of wealth holdings as recommended by the Davis Tax Committee”. This could be paving the way to a possible wealth tax in the future.

Relief and incentives

The Covid-19 social relief of distress grant of R350 paid is extended for 12 months. This was paid to 10.5 million beneficiaries at a cost of R44 billion. South Africa now pays grants to more than 46% of the population.

The employment tax incentive is expanded to support youth employment. This will increase from a maximum of R1 000 to R1 500 per month for the first 12 months and from R500 to R750, respectively, in the second 12 months of eligibility.

Inflationary increase for permanent social grants. State old age grant increases to R1 985 a month and R2 005 for those older than 75. The child support grant increases to R480 a month. The child support and old age grants together account for more than half the total grant expenditure and support 17.2 million beneficiaries.

Article: News24

Share:

Facebook
Twitter
Pinterest
LinkedIn
On Key

Related Posts

Voluntary Compliance Encouraged By SARS

SARS further stated that: “Where through its own investigative processes, SARS discovers non-compliance, it will not avail this opportunity to non-compliant taxpayers but will act

error: Content is protected !!