National Treasury hereby releases for public comment the Rates and Monetary Amounts and Amendment of Revenue Laws Bill, 2012 (the Bill). Together with the rest of the taxation laws amendment bills for 2012, this legislation will give effect to the tax proposals announced by the Minister of Finance in the Budget Review 2012 (see Chapter 4 and Annexure C) tabled in Parliament on the
22nd of February 2012.
This legislation explains the changes that will be made to rates and amounts e.g. thresholds. Draft legislation containing the remaining tax policy proposals announced in 2012 will be released later this year.
This document may be obtained from the National Treasury (www.treasury.gov.za) or SARS (www.sars.gov.za) websites (Note: An Explanatory Memorandum is also published to assist in interpreting and understanding the above legislation at a more detailed level).
Provided below are the highlights contained in the Bill.
1. Changes relating to Personal Income Tax:
- The 2012 Budget proposes direct personal income tax relief to individuals amounting to R9.5 billion which is approximately R2 billion above inflation thereby granting real relief in respect of personal income tax. This includes increasing the primary, secondary and tertiary rebates which are available to natural persons.
- The thresholds at which individuals become liable for personal income tax have also been increased.
| Taxable income (R) | 2011/12 | Taxable income (R) | 2012/13 |
| R0 – R150 000 | 18% of each R1 | R0 – R160 000 | 18% of each R1 |
| R150 001 – R235 000 | R27 000 + 25% of amount above R150 000 | R160 001 – R250 000 | R28 800 + 25% of amount above R150 000 |
| R235 001 – R325 000 | R48 250 + 30% of the amount above R235 000 | R250 001 – R346 000 | R51 300 + 30% of the amount above R235 000 |
| R325 001 – R455 000 | R75 250 + 35% of the amount above R325 000 | R346 001 – R484 000 | R80 100 + 35% of the amount above R325 000 |
| R455 001 – R580 000 | R120 750 + 38% of the amount above R455 000 | R484 001 – R617 000 | R128 400 + 38% of the amount above R455 000 |
| R580 001 | R168 250 + 40% of the amount above R580 000 | R617 001 | R178 940 + 40% of the amount above R580 000 |
| Rebates | Rebates | ||
| Primary | R10 755 | Primary | R11 440 |
| Secondary | R6 012 | Secondary | R6 390 |
| Tertiary | R2 000 | Tertiary | R2 130 |
| Tax threshold | Tax threshold | ||
| Below age 65 | R59 750 | Below age 65 | R63 556 |
| Age 65 and over | R93 150 | Age 65 and over | R99 056 |
| Age 75 and over | R104 261 | Age 75 and over | R110 889 |
2. The medical credit system will be implemented from 1 March 2012. It should be noted that the credits provided are higher than the credits which were initially proposed (see illustrative thresholds in table below) for individuals in respect of contributions made to a medical aid scheme.
Medical scheme contributions, 2011/12 – 2012/13
| Description | Illustrative thresholds | Proposed thresholds |
| Medical scheme fees tax credit, in respect of benefits to the taxpayer | R216 | R230 |
| Medical scheme fees tax credit, in respect of benefits to the taxpayer and one dependant | R432 | R460 |
| Medical scheme fees tax credit, in respect of benefits to each additional dependant | R144 | R154 |
- Capital gains tax inclusion rates for “individuals and special trusts” have been increased to 33.3 percent, thereby shifting their maximum effective capital gains tax rate to 13.3 percent.
- The inclusion rate for other entities (companies and other trusts) will increase to 66.6 percent, raising the effective rate for companies to 18.6 percent and for most trusts to 26.7 percent.
- The changes in the capital gains tax rate will generally apply solely in respect of disposals occurring within years of assessment commencing from 1 March 2012.
- For individuals and trusts with a year of assessment beginning on 1 March 2012 this will not result in any anomalies but companies and trusts with years of assessment commencing after that date should please take note of the said date.
- The increases mentioned above for capital gains tax have been offset by increases in the exclusions relating to capital gains tax. These exclusions and the increases thereof will generally assist the middle and lower income groups.
Proposed capital gains exclusions, 2011/12 – 2012/13
| Description | Current thresholds | Proposed thresholds |
| Annual exclusion for individuals and special trusts | R20 000 | R30 000 |
| Exclusion on death | R200 000 | R300 000 |
| Exclusion in respect of disposal of primary residence (based on amount of capital gain or loss on disposal) | R1.5 million | R2 million |
| Maximum market value of all assets allowed within definition of small business on disposal when person over 55 | R5 million | R10 million |
| Exclusion amount on disposal of small business when person over 55 | R900 000 | R1.8 million |
- Long-term insures: it should be noted that the unique nature of the four funds tax system requires special rules when applying the increased capital gains inclusion rate as from 1 March 2012. These special rules will be subject to a separate media release to be released shortly.
- Foreign companies with domestic income are subject to a 33 percent rate of tax. It is proposed to reduce this rate to 28 percent.
- Personal service providers are subject to a 33 percent rate, which will be reduced to 28 percent.
- Gold companies currently have the choice of two gold formula rates - the standard formula or the higher formula. With the repeal of the secondary tax on companies, the higher formula will be removed as superfluous.
6. The increases in specific excise duties on tobacco products (between 5 and 8.2 percent) and alcoholic beverages (between 6 and 20 percent) will generate approximately R1.84 billion in additional tax revenue. The increases will complement broader efforts to reduce substance abuse.
Public comments
Members of the public are invited to send their comments to the National Treasury before 31 March 2012. Comments in this regard should be sent by e-mail to nomfanelo.mpotulo@treasury.gov.za or by fax to 012 315 5516.
