The Budget Speech 2016 – a summary of its impact on you

[TeamSouthAfrica]

Finance Minister Gordhan’s 24 February Budget Speech has come and gone, but the implications are still with us and will be until the next one. Having an understanding of how these implications will affect you is vital for your financial planning, that’s why we held a twitterview with our very own Errol Meyer on the day of the event under #BudgetSpeechWithErrol.

Apart from being a senior manager at Standard Bank’s Financial Consultancy, Mr Meyer is also a Certified Financial Planner and an Admitted Advocate of the High Court (SA). Judging by his qualifications, there’s no one better to explain 2016’s national budget. Below, we offer a quick summary of Mr Meyer’s Budget Speech analysis so you can plan your spending and saving:

• The marginal tax rate of 41% and VAT rate of 14% were not increased, and the tax-free savings level of R30 000 remains unchanged.

• Increased tax relief on retirement contributions means that planning for retirement and long-term financial goals has become easier. However, on 1 March, the distinction between retirement funding and non-retirement funding fell away. This means that employer contributions to pension or provident funds are taxable and regarded as part of the 27.5% tax deduction allowed from taxable income-passive income.

• The Capital Gains Tax (CGT) has been increased from 33.3% to 40%, but this will reduce the level of estate duty payable by taxpayers. CGT will also be applied at a higher level on trusts when they are disposed of, so estate duty will fall away.

• In the ‘sin tax’ category, sugar-sweetened beverages will cost more from I April this year. The hope is that South Africans will make healthier drinks choices.

• Basic increases that will also impact on your pocket include:
  • A 30c increase in the general fuel level
  • A tyre levy of R2.30 per kilogram of tyre to finance recycling programmes
  • Incandescent globe tax moving from R4 to R6 per globe
  • Property transfer duties from 11% to 13% if the property is valued at above R 10 million
  • Increasing the plastic bag levy from 6c to 8c per bag.

Though many of South Africa’s taxation levels have changed, making sure that you understand the effects of these changes is as important as it ever was, especially when it comes to preparing for your retirement.

If you have any questions, or feel you’d like help with your financial planning, we encourage you to meet with one of our trained and experienced financial planners.

For information, visit our website or SMS ‘PLAN’ and your name to 31791 and we will contact you.