How does the 2012 Budget impact your Portfolio?
Minister of Finance Pravin Gordhan | 22 February, 2012 - Budget
“The 2012 Budget has been well received and has silenced most of the sceptics, but what is the impact on the affluent population? The Treasury has managed to slash the budget deficit while also funding a R1,1-trillion budget for the ambitious infrastructure and social programmes outlined by President Jacob Zuma in his state of the nation address this month. Finance Minister Pravin Gordhan believes that "South Africa’s finances are in good health", and the figures he announced on Wednesday should reduce the chances of a downgrade in the country’s sovereign credit rating. Taxpayers will be pleased by the tax breaks of R9,5bn to individuals and R6,4bn to companies, although the rich will be paying more in capital gains tax and withholding tax on dividends.”
The secondary tax on companies will be terminated on 31 March 2012 and a withholding tax on dividends will be implemented on 1 April 2012. This will align South Africa’s tax treatment of dividends with that in most other countries. The dividend tax will be introduced at 15 per cent.
Capital gains tax
The introduction of capital gains tax in October 2001 was an important step in broadening the tax base. In order to reduce the scope for tax arbitrage and broaden the tax base further, the CGT inclusion rate for individuals and special trusts will be increased with effect from 1 March 2012 from 25 to 33.3 per cent, and for companies and other trusts from 50 to 66.6 per cent. To mitigate the impact on middle-income earners, the various exclusion thresholds are increased.
Do you want to invest abroad?
Want to start building a tax-free portfolio?
Take advantage of the relaxed exchange controls, anyone working in South Africa is allowed to invest R5 Million per year abroad (R1 Million without tax clearance and R4 Million with SARS clearance).