Comentary provided by Sage Pastel Payroll & HR

 

Finance Minister Pravin Gordhan delivered no surprises in his Budget Speech on 26 February, favouring consistency and steadiness over change and fireworks ahead of the national election on 7 May. His Budget Speech once again put job creation, infrastructure development, social spending and education right on top of the nation’s list of priorities.

 

Taxpayers will benefit from R9,25 billion in personal income tax relief in the new tax year, though this relief hardly caters for the effects of inflation, says Madelein van der Watt, Development Manager at Sage Pastel Payroll & HR. 40% of the tax relief was allocated to those who earn up to R250,000 per annum, meaning individuals earning more than R250,000 per annum will receive a little less of the allocated tax relief pool.

 

Personal income tax brackets and rebates

Personal income tax brackets and rebates have been slightly adjusted. The amount an individual can earn before being required to pay income tax has been increased for the 2014/15 tax year:

• Increase from R67,111 to R70, 700 for individuals below the age of 65
• Increase from R104,611 to R110, 200 for individuals between the ages of 65 to below 75
• Increase from R117,111 to R123, 350 for individuals over 75 years

 

Individuals aged 65 and older will pay less tax due to an increase in the secondary rebate. The tertiary rebate for individuals aged 75 or older has also been increased which means less tax payable by the elderly from 01 March 2014.

The annual tax rebates for individuals have been increased as follows:

• Under the age of 65 increased from R12,080 to R12, 726
• Aged 65 to 75 increased from R6,750 to R7, 110
• Aged 75 and older increased from R2,250 to R2, 367

 

Though some commentators had speculated that high earners would need to pay higher income tax, the Minister left income tax rates untouched, says Van der Watt. The lowest tax bracket remains at a tax rate of 18% (annual taxable income up to R174, 550) and the highest tax bracket remains taxable at 40% (annual taxable income of more than R673, 100).