2019 Budget Speech Highlights

2019 Budget Speech Highlights

On 20 February 2019, Tito Mboweni, Finance Minister delivered his 2019 Budget Speech. Hereby a short summary of some of the significant points and proposals for the 2019 Budget as tabled by the Minister of Finance:

1. Personal Income Tax: The personal income tax brackets have not been changed. The tax-free thresholds increased marginally due to the increase in the rebates. A 1.1% increase in the primary, secondary and tertiary rebates for individuals, providing a small amount of relief for inflation. The change in the rebate will increase the tax-free threshold from R78 150 to R79 000.
2. Medical Scheme Fees Tax Credits: The medical credits have not been changed. This will be utilised to fund the National Health Programme over the next few years.
3. Dividend Stripping Anti-Avoidance Rules: As from 20 February 2019, additional rules governing share buy-backs and dividend stripping will apply.
4. Review of Group Reorganisation Rules: The rules relating to group reorganisations are being reviewed to limit abuse.
5. Enhancements in Tax Administration: SARS will release a discussion paper on the potential use of electronic fiscal devices, known as electronic cash registers, to assist revenue administration to monitor business transactions.
6. Transparency in Tax Administration: Government has started implementing urgent recommendations of the Nugent Commission. A new Commissioner will be appointed shortly, and the Large Business Centre will be re-established.
7. Carbon Fuel Levy: As from 5 June 2019, a carbon fuel levy at 9 cents per litre on petrol and 10 cents per litre on diesel will be introduced.
8. Venture Capital Companies: The rules relating to venture capital companies are being reviewed to limit abuse.
9. Annuitisation - Provident Funds: The annuitisation of retirement benefits for provident funds has been postponed to 1 March 2021 for further consultation at Nedlac. Should no agreement be reached the continuation of the tax deduction will be reviewed.
10. Employment tax incentive: In 2018, government extended the employment tax incentive by 10 years. In addition, the eligible income bands will be adjusted upwards to partially cater for inflation. From 1 March 2019, employers will be able to claim the maximum value of R1 000 per month for employees earning up to R4 500 monthly, up from R4 000 previously. The incentive value will taper to zero at the maximum monthly income of R6 500.
    
    Other important 2019 budget proposals to note:

• Increase in sugar-tax to 2.21 cents per gram in excess of 4 grams of sugar per 100ml from 1 April 2019.
• Increase in excise duties on alcohol and tobacco products by between 7.4 per cent and 9 per cent, well above inflation. Proposals to tax electronic cigarettes and tobacco heating products.
• New items to be added to the VAT zero-rated list: white bread, cake flour and sanitary pads.
• An import tax will be introduced on scrap metal.