2017 - 2018 Tax Guide

2017/18 Tax Guide

2017/2018 tax rates (1 March 2017 – 28 February 2018)

South African Individual Taxpayers

Income exceeding:

Not Exceeding:

Rates of tax (R)

R 0

R189 880

18% of taxable income

R189 880

R296 540

R34 178 + 26% of taxable income above R189 880

R296 540

R410 460

R61 910 + 31% of taxable income above R296 540

R410 460

R555 600

R97 225 + 36% of taxable income above R410 460

R555 600

R708 310

R149 475 + 39% of taxable income above R555 600

R708 310

R1 500 000

R209 032 + 41% of taxable income above R708 310

R1 500 000 and above

 

R533 625 + 45% of taxable income above R1 500 000

The primary and additional age rebate is available to all South African individual taxpayers. The rebate is not reduced where a person has taxable income for less than the standard South African tax year. The rebate is given against the tax calculated and not against the actual income. The only instance where the rate is reduced is on death of the taxpayer.

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Tax Rebates

Tax Rebate

 
 

2017/2018

Primary

R13 635

Secondary (Persons 65 and older)

R 7 479

Tertiary (Persons 75 and older)

R 2 493

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Tax Calculation

Taxable income: R 200 000

Take from the tax table above the column into which the amount falls. This will be:

Income exceeding:

Not Excceding:

Retes of tax (R)

R 189 880

R 296 540

R34 178 + 26% of taxable income above R189 880

Your tax computation is on the first R 189 880:

R 34 178

On the balance (R 200 000 less R 189 880) 

R 2 631.20

Total

R 36 809.20

   

Rebate (taxpayer under 65)

(R 13 635)

Tax payable

R 23 174.20

       

Taxable income: R 800,000.

Income exceeding:

Not Exceeding:

Tax

R 708 310

 1 500 000

R 209 032 + 41% of taxable income above R 708 310

Your tax computation is on the first R 708 310:

R 209 032

On the balance (R 800 000 less R 708 310)

R 37 592.90

Total

R 246 624.90

   

Rebate (taxpayer under 65)

(R 13 635)

Tax payable

R 232 989.90

       

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Tax Thresholds 

   

Person

2017/2018

Under 65

R75 750

65 and older

R117 300

75 and older

R131 150

Interest Exemption

Individuals under 65

R 23,800 per annum

Individuals 65 and over

R 34,500 per annum

The above exemptions are applicable to interest earned from a South African source earned by a natural person.

Interest which is received or accrues by or to any person that is not a resident is exempt from tax unless:

  1. that person is a natural person who was physically present in the Republic of South Africa for a period exceeding 183 days in aggregate during the twelve-month period preceding the date on which the interest was received or accrues by or to that person; or
  2. the debt from which the interest arises is effectively connected to a permanent establishment of that person in the Republic.”

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Dividends Tax

Dividends Tax

Dividends tax is a final tax at a rate of 20% on dividends paid by resident companies and by non-resident companies in respect of shares listed on the JSE. Dividends are tax exempt if the beneficial owner of the dividend is a South African company, retirement fund or other exempt person. Non-resident beneficial owners of dividends may benefit from reduced tax rates in limited circumstances. The tax is to be withheld by companies paying the taxable dividends or by regulated intermediaries in the case of dividends on listed shares. The tax on dividends in kind (other than in cash) is payable and is borne by the company that declares and pays the dividend.

Dividends received by individuals from South African companies are generally exempt from income tax, but dividends tax at a rate of 20% is withheld by the entities paying the dividends to the individuals. Dividends received by South African resident individuals from REITs (listed and regulated property owning companies) are subject to income tax. Non-residents in receipt of those dividends are only subject to dividends tax.

Foreign dividends

Most foreign dividends received by individuals from foreign companies (shareholding of less than 10% in the foreign company) are taxable at a maximum effective rate of 20%. No deductions are allowed for expenditure to produce foreign dividends.

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MEDICAL TAX CREDIT RATES

 

Per month(R)

2017/2018

For the taxpayer who paid the medical scheme contributions

R 303

For the first dependant

R 303

For each additional dependant(s)

R 204

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Pension, Provident and Retirement Annuity Fund Contributions

Contributions to a pension, provident or retirement annuity fund during a tax year are deductible by the member of the fund. The deduction is limited to the greater of:

  • 5% of the employee’s remuneration for PAYE purposes (excluding retirement fund lump sums and severance benefits); or
  • 5% of the employee’s taxable income (excluding retirement fund lump sums and severance benefits).

The deduction is limited to a maximum amount of R 350 000.

If contributions exceed the limitation during a particular tax year, the contributions are carried over to the next tax year.

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Donations Exemption

The deduction in respect of donations to certain public benefit organisations is limited to 10% of an individual’s taxable income. Such an organisation must be specifically approved by the South African Revenue Service and they must issue with their receipt confirming your contribution. The amount of donations exceeding 10% of the taxable income is treated as a donation to qualifying public benefit organisations in the following tax year.

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Donations Tax

Donations tax is levied at a flat rate of 20% of the value of property donated.

In the case of a natural person:

  • The first R 100 000 of the value of property donated is exempt from donations tax.

In the case of a juristic person:

  • Donations of casual gifts not exceeding R 10 000 per annum in total are exempt from donations tax.

In the case of depositions between spouses, depositions between South African group companies and donations to certain public benefit organisations:

  • No donations tax is levied.

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Deemed Travel

Rates per kilometre, which may be used in determining the allowable deduction for business travel against an allowance or advance where actual costs are not claimed, are determined by using the following table:

Value of the vehicle (including VAT) (R)

Fixed cost (R p.a.)

Fuel cost (c/km)

Maintenance cost (c/km)

0 – 85 000

28 492

91.2

32.9

85 001 – 170 000

50 924

101.8

41.2

170 001 – 255 000

73 427

110.6

45.4

255 001 – 340 000

93 267

118.9

49.6

340 001 – 425 000

113 179

127.2

58.2

425 001 – 510 000

134 035

127.2

58.2

510 001 – 595 000

154 879

150.9

84.9

Exceeding 595 000

154 879

150.9

84.9

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Company Cars

See Employee Tax Structuring for more detailed rules.

Employee-owned vehicles are a fringe benefit, where a business vehicle is provided to an employee for the private usage. The taxable value is calculated at 3.5% of the determined cash value (inclusive of VAT) per month of each vehicle. Where the vehicle is subject to a maintenance plan when the employer acquired it, the taxable value will amount to 3.25% of the determined value. If the vehicle was acquired by the employer under an operating lease, the taxable value will be the cost incurred by the employer under the operating lease plus the cost of fuel.

80% of the travelling allowance must be included in the employee’s remuneration for the purposes of calculating PAYE. The percentage is reduced to 20% if the employer is satisfied that at least 80% of the use of the motor vehicle for the tax year will be for business purposes.

No fuel cost may be claimed if the employee has not borne the full cost of fuel used in the vehicle and no maintenance cost may be claimed if the employee has not borne the full cost of maintaining the vehicle (e.g. if the vehicle is covered by a maintenance plan).

The fixed cost must be reduced on a pro rata basis if the vehicle is used for business purposes for less than a full year.

Alternatively:

Where the distance travelled for business purposes does not exceed 12000 kilometres per annum, no tax is payable on an allowance paid by an employer to an employee up to the rate of 355 cents per kilometre, regardless of the value of the vehicle. This alternative is not available if other compensation in the form of an allowance or reimbursement (other than for parking or toll fees) is received from the employer in respect of the vehicle.

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Housing

Non-resident employees should see Expatriates regarding their housing benefit.

Where an employer provides an employee with a house, the fringe benefit value is normally the higher of the cost to the employer or a formula calculated on the employee’s salary. Let us know should you require the value calculated.

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Subsistence Allowance

The following amounts will be deemed to have been actually expended by a recipient to whom an allowance or advance has been granted or paid –

  • Where the accommodation to which the allowance or advance relates, is in the Republic of South Africa and the allowance or advance is granted to pay for –
    • meals and incidental costs, and amount of R397 per day;
    • for incidental costs only, R122 per day
  • Where here the accommodation to which the allowance or advance relates, is outside the Republic of South Africa and the allowance or advance is granted to pay for meals and incidental costs, an amount per day determined in accordance with the following table for the country in which the accommodation is located—

 

Last modified on Friday, 04 August 2017 11:26
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