INTRODUCTION

Following a trend which commenced in 2013, the number and scope of proposed changes to the various fiscal Acts (mainly the Income Tax Act and VAT Act) continue to fall. This, no doubt, reflects the depletion of skills at Treasury, and the failure to replace them.

Moreover, those changes that have been announced are mainly of a highly technical nature, and are probably more of interest to tax professionals than to business people in general, and even to legal and financial executives in those businesses.

Of course, the greatly feared spectre of wholesale tax increases did not materialise with “only” a 1% increase in the individual tax rates, also resulting in an increase in the maximum marginal rate from 40% to 41%, and with the matching increase in the tax rate applicable to trusts from 40% to 41%. As a consequence, the effective rate of CGT increases from 13.3% to 13.7% for individuals, and from 26.7% to 27.3% for trusts (and as there was no change to the company tax rate, the effective rate of CGT for companies remains unchanged at 18.7%). The major portion of the tax shortfall is to be made up by way of a large increase in the fuel levy.

Because, as mentioned, the bulk of the proposed amendments are so technical in nature, these will be mentioned in passing, and only those of more general interest will be explored in a little more detail.

On the positive side some good news was received in the form of further relaxations of exchange controls.

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Written by Ernest Mazansky, Director: Werksmans Tax (Pty) Ltd, Head of Tax Practice; Leon Rood, Director; and Michael Honiball, Director: Head of International Tax