2021 Budget Speech: What you need to know

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Finance Minister Tito Mboweni delivered his third National Budget Speech on 24 February 2021. It was his first annual budget address since the start of the COVID-19 pandemic. In 2020, the Minister’s message was, “Our economy has won before, and it will win again.” In 2021, he re-confirmed that there is reason for hope from SA’s “much-improved economic outlook.” The Minister has remained steadfast in getting the fiscal house of the state in order. Speaking broadly of tax increases, Minister Mboweni says these will be “kept to a minimum as we stabilise our public finances”.

  • Personal income tax contributed R482 billion of the total tax collections of R1.2 trillion (40% of total tax revenue).
  • The personal income tax brackets and the primary, secondary, and tertiary rebates will see an above-inflation increase of 5%. The change in the primary rebate increases the tax-free threshold from R83 100 (in 2020) to R87 300 for taxpayers under 65 years old.
  • Tax brackets for individuals for the year of assessment ending 28 February 2022 will be as follows:
Taxable income (R) Rates of tax (R)
1 – 216 200 18% of taxable income
216 201 – 337 800 38 916 + 26% of taxable income above 216 200
337 801 – 467 500 70 532 + 31% of taxable income above 337 800
467 501 – 613 600 110 739 + 36% of taxable income above 467 500
613 601 – 782 200 163 335 + 39% of taxable income above 613 600
782 201 – 1 656 600 229 089 + 41% of taxable income above 782 200
1 656 601 and above 587 593 + 45% of taxable income above 1 656 600

 

  • There will be an increase in the value of medical tax credits in 2021/22, rising from R319 to R332 per month for the first two beneficiaries, and from R215 to R224 per month for the remaining beneficiaries.
  • The annual exemption on interest earned by individuals younger than 65 years
    (R23 800) and for individuals 65 years and older (R34 500) remains the same.
  • The annual contribution limit to tax-free savings accounts remains R36 000.
  • Sin taxes on tobacco and alcohol have been increased by 8%.
  • Fuel levies will increase by 27 cents per litre:
    • 15 cents per litre for the general fuel levy;
    • 11 cents per litre for the Road Accident Fund levy; and
    • 1 cent per litre for the carbon fuel levy
  • The following rates remain unchanged:
    • VAT at 15%;
    • Corporate income tax at 28% and dividends withholding tax at 20%;
    • All inclusion rates for Capital Gains Tax; and
    • Interest and royalty withholding tax rates at 15%
  • Although not proposed to take effect in the current year, there is a proposal for a decrease in the corporate income tax rate to 27% from 1 April 2022.

This list is not comprehensive. You are welcome to download ASL’s electronic tax guide from our website, CLICK HERE

Download the full summary HERE**

View the visual highlights HERE**

For more information you can contact us on 021 840 1600 or tax@asl.co.za