The 2023 Budget Speech was delivered by a light-hearted Finance Minister, Enoch Godongwana, with an overarching theme of “repair and maintenance”. A plan to reduce the fiscal deficit, whilst maintaining expenditure on social and infrastructure development was presented. This would be achieved without increasing taxes, as the fiscus was bolstered by strong increases in revenue collection.
The Minister was proud to announce tax relief measures for individual taxpayers, in addition to zero tax increases. Following past trends, the customary inflationary adjustment to personal income tax tables and medical tax credits was declared. Treasury has also increased the threshold for retirement lump sum benefits and lump sum withdrawals tax tables as well as transfer duty tables by 10%. Another boon for corporate taxpayers carried over from last year was the reduced corporate income tax rate, down to 27% from 1 April 2023.
Keeping in line with global trends, an increased focus on incentivising renewable energy was highlighted. Corporate taxpayers who elect to invest in renewables will be able to claim a 125% tax deduction on their investment over the next two years, with no threshold limit. Individual taxpayers who install solar panels in the next year will be able to claim a 25% rebate on the cost, up to a maximum of R15,000. These renewable energy tax incentives are geared to run in parallel with Government’s plan to assuage the country’s energy crisis. This would be achieved by extending debt relief measures to Eskom, amounting to R254 billion.
Areas of concern were the projected expenditure on the social wage, which equates to 51% of consolidated government expenditure over the next three years. During the next year this would equate to more than R378 billion, with no end in sight. Another red flag is the fiscal debt service costs, which exceed R340 billion. These expenses on the country’s income statement are only likely to increase, with the extension of Covid-19 relief measures until 31 March 2024, and the ever-increasing social wage.
Treasury elected not to delve too deeply into the measures it would take to combat corruption and wasteful expenditure by state owned entities. A cursory mention was made of the looming potential grey listing of South Africa by the Financial Action Task Force in coming weeks. The increased scrutiny over South Africa is a dark cloud threatening to disrupt foreign direct investment and incentives to stimulate economic growth.
The Minister promoted the message surrounding increased revenue collection and encouraging taxpayer compliance. Tipping his hat to Edward Kieswetter the Commissioner of the South African Revenue Service (“SARS”), Godongwana announced that revenue collection had increased by more than R189 billion in the past year alone. This was largely due to increased collections from corporate taxpayers, especially in the mining and retail sectors.
SARS has demonstrated that it is casting an eye to greener pastures, being the South African expatriate community abroad. An apportionment limitation to both the annual interest exemption and capital gains tax exemption was introduced. These limitations directly target South Africans engaged in the process of ceasing their tax residency. Future legislative proposals alluded to include steps providing for closer scrutiny and possible taxation of offshore structures, including foreign trusts with South African beneficiaries.
Finally, other noteworthy amendments include marginal increases to the so-called “sin taxes” amounting to approximately 4.9% for both alcohol and tobacco products.
Head of Tax Legal
|Taxable Income||Rate of tax (R)|
|R1 – R237 100||18% of taxable income|
|R237 101 – R370 500||R42 678 + 26% of taxable income above R237 100|
|R370 501 – R512 800||R77 362 + 31% of taxable income above R370 500|
|R512 801 – R673 000||R121 475 + 36% of taxable income above R512 800|
|R673 001 – R857 900||R179 147 + 39% of taxable income above R673 000|
|R857 901 – R1 817 000||R251 258 + 41% of taxable income above R857 900|
|R1 817 001 and above||R644 489 + 45% of taxable income above R1 817 000|
|Taxable Income||Rate of tax (R)|
|R1 – R226 000||18% of taxable income|
|R226 001 – R353 100||R40 680 + 26% of taxable income above R226 000|
|R353 101 – R488 700||R73 726 + 31% of taxable income above R353 100|
|R488 701 – R641 400||R115 762 + 36% of taxable income above R488 700|
|R641 401 – R817 600||R170 734 + 39% of taxable income above R641 400|
|R817 601 – R1 731 600||R239 452 + 41% of taxable income above R817 600|
|R1 731 601 and above||R1 731 601 and above|
|Primary||R17 235||R16 425|
|Secondary (Persons 65 and older)||R9 444||R9 000|
|Tertiary (Persons 75 and older)||R3 145||R2 997|
|Below age 65||R95 750||R91 250|
|Age 65 to below 75||R148 217||R141 250|
|Age 75 and over||R165 689||R157 900|
|Per month (R)||2023/2024||2022/2023|
|For the taxpayer who paid the medical scheme contributions||R364||R347|
|For the first dependent||R364||R347|
|For each additional dependent(s)||R246||R234|
The table below sets out a comparison of the take-home pay that an individual can expect based on the 2023 and 2024 tax tables:
|Under 65||65 – 74||Over 75||Under 65||65 – 74||Over 75|
|R7 979.17||R95 750.00||R7 979.17||R7 979.17||R7 979.17||R7 911.67||R7 979.17||R7 979.17|
|R10 000.00||R120 000.00||R9 636.25||R10 000.00||R10 000.00||R9 568.75||R10 000.00||R10 000.00|
|R15 000.00||R180 000.00||R13 736.25||R14 523.25||R14 785.33||R13 668.75||R14 418.75||R14 668.50|
|R20 000.00||R240 000.00||R17 816.92||R18 603.92||R18 866.00||R17 675.42||R18 425.42||R18 675.17|
|R30 000.00||R360 000.00||R25 216.92||R26 003.92||R26 266.00||R25 046.67||R25 796.67||R26 046.42|
|R40 000.00||R480 000.00||R32 160.67||R32 947.67||R33 209.75||R31 946.67||R32 696.67||R32 946.42|
|R50 000.00||R600 000.00||R38 697.33||R39 484.33||R39 746.42||R38 382.92||R39 132.92||R39 382.67|
|R70 000.00||R840 000.00||R51 079.83||R51 866.83||R52 128.92||R50 649.08||R51 399.08||R51 648.83|
|R110 000.00||R1 320 000.00||R74 709.67||R75 496.67||R75 758.75||R74 249.08||R74 999.08||R75 248.83|
|R130 000.00||R1 560 000.00||R86 509.67||R87 296.67||R87 558.75||R86 049.08||R86 799.08||R87 048.83|
|R170 000.00||R2 040 000.00||R109 366.33||R110 153.33||R110 415.42||R108 621.08||R109 371.08||R109 620.83|
The table below sets out a comparison of the PAYE that would have been/will be deducted from an individual’s salary in 2023 and 2024:
|Under 65||65 – 74||Over 75||Under 65||65 – 74||Over 75|
|R7 979.17||R95 750.00||–||–||–||R67.50||–||–|
|R10 000.00||R120 000.00||R363.75||–||–||R431.25||–||–|
|R15 000.00||R180 000.00||R1 263.75||R476.75||R214.67||R1 331.25||R581.25||R331.50|
|R20 000.00||R240 000.00||R2 183.08||R1 396.08||R1 134.00||R2 324.58||R1 574.58||R1 324.83|
|R30 000.00||R360 000.00||R4 783.08||R3 996.08||R3 734.00||R4 953.33||R4 203.33||R3 953.58|
|R40 000.00||R480 000.00||R7 839.33||R7 052.33||R6 790.25||R8 053.33||R7 303.33||R7 053.58|
|R50 000.00||R600 000.00||R11 302.67||R10 515.67||R10 253.58||R11 617.08||R10 867.08||R10 617.33|
|R70 000.00||R840 000.00||R18 920.17||R18 133.17||R17 871.08||R19 350.92||R18 600.92||R18 351.17|
|R110 000.00||R1 320 000.00||R35 290.33||R34 503.33||R34 241.25||R35 750.92||R35 000.92||R34 751.17|
|R130 000.00||R1 560 000.00||R43 490.33||R42 703.33||R42 441.25||R43 950.92||R43 200.92||R42 951.17|
|R150 000.00||R2 040 000.00||R60 633.67||R59 846.67||R59 584.58||R61 378.92||R60 682.92||R60 379.17|
|South African Sourced Interest|
|Persons under 65 years||R23 800|
|Persons 65 years and older||R34 500|
South African sourced interest income earned by non-residents is exempt if the non-resident was absent from the country for an aggregate of 183 days in the 12 months preceding the accrual of that interest.
Amounts received by or accrued to an individual in respect of particular prescribed investment instruments and policies are exempt. Contributions to these prescribed investments/policies are subject to an annual limit of R36 000. Currently, a R500 000 lifetime limit applies.
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.
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.
Foreign interest received by or accrued to a resident is subject to normal tax in South Africa.
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 table on the SARS website www.sars.gov.za.
- If the travel allowance is applicable to a portion of the tax year, the fixed cost is reduced proportionately.
- Where the travel allowance is based on actual distance travelled by the employee for business purposes, no tax is payable on an allowance paid by an employer to an employee, up to the rate of R4,64 per kilometre regardless of the value of the vehicle or distance travelled. 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.
- It is compulsory to keep a travel logbook in order to claim business travel expenses.
- When claiming actual expenditure, the cost of the vehicle must be limited to the maximum allowed value as per the SARS website www.sars.gov.za for the purposes of calculating finance charges and wear and tear.
Where the recipient is obliged to spend at least one night away from his or her usual place of residence on business, and the accommodation to which that 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 or incidental costs only, an amount, published on the SARS website www.sars.gov.za, under Legal Counsel / Secondary Legislation / Income Tax Notices / 2023, is deemed to have been expended per day.
Where the accommodation to which that allowance or advance relates is outside the Republic of South Africa, a specific amount per country is deemed to have been expended. Details of these amounts are published on the SARS website under Legal Counsel / Secondary Legislation / Income Tax Notices / 2019.
Where the recipient is by reason of the duties of his or her office or employment obliged to spend a part of a day away from his or her usual place of work or employment, a reimbursement or advance for expenditure actually incurred by the recipient is exempt if the recipient is allowed by his or her principal to incur expenditure on meals and other incidental costs for that part of a day and the amount of the expenditure does not exceed an amount published on the SARS website www.sars.gov.za, under Legal Counsel / Secondary Legislation / Income Tax Notices / 2023.
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 using the table published on the SARS website www.sars.gov.za, under Legal Counsel / Secondary Legislation / Income Tax Notices / 2023 / Fixing of rate per kilometre in respect of motor vehicles.
- 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.
- The actual distance travelled during a tax year, and the distance travelled for business purposes substantiated by a log book, are used to determine the costs which may be claimed against a travelling allowance.
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:
- 27.5% of the employee’s remuneration for PAYE purposes (excluding retirement fund lump sums and severance benefits); or
- 27.5% 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 limit during a particular tax year, the contributions are carried over to the next tax year.
Deductions in respect of donations to certain public benefit organisations are limited to 10% of taxable income (excluding retirement fund lump sums and severance benefits). 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.
Donations tax is levied at a flat rate of 20% on the cumulative value of donations not exceeding R30 million and a rate of 25% on the cumulative value exceeding R30 million. This was effective March 2018. Donations made prior to this date must not be included in the cumulative total.
The first R100 000 of donations in each year by an individual is exempt from donations tax, as well as donations to spouses and certain public benefit organisations.
Donations made by non-residents are also exempt from donations tax.
Lump sum benefits in consequence of the withdrawal of membership of a retirement fund, including amounts assigned in terms of divorce settlements in certain circumstances, other than death/retirement lump sum benefits, are taxed according to the following table:
|Taxable income from|
|R1 – R27 500||0% of taxable income|
|R27 501 – R726 000||18% of taxable income above R27 500|
|R726 001 – R1 089 000||R125 730 + 27% of taxable income above R726 000|
|R1 089 001 and above||R223 740 + 36% of taxable income above R1 089 000|
Lump sum benefits in consequence of retirement/death are taxed according to the following table:
|Taxable income from|
|R1 – R550 000||0% of taxable income|
|R550 001 – R770 000||18% of taxable income above R550 000|
|R770 001 – R1 155 000||R39 600 + 27% of taxable income above R770 000|
|R1 155 001 and above||R143 550 + 36% of taxable income above R1 155 000|
* Taxable income is cumulative and includes all lump sum payments whether on retirement (after 1 October 2007) or withdrawal (after 1 March 2009), or a severance benefit (after 1 March 2011).
|Maximum effective rate of tax|
|Individuals and special trusts||18%|
|Individuals, special trusts and individual policyholder funds||40%|
|Companies and trusts||80%|
|Individuals, special trusts and individual policyholder funds||R40 000|
|Individuals in year of death||R300 000|
|Primary residence exclusion on the disposal of a primary residence||R2 million gain/loss|
|Small business assets (persons over age 55 and market value of assets not more than R10 million)||R1.8 million|
|Sale of primary residence|
|– Proceeds||R4 000 000|
|– Agent commission||(R200 000)|
|– Purchase price||(R1 500 000)|
|– Improvements||(R150 000)|
|Sub total||R2 150 000|
|Primary residence exclusion||(R2 000 000)|
|Gain from sale||R150 000|
|Sale of shares|
|– Proceeds||R50 000|
|– Purchase price||(R35 000)|
|Gain from sale||R15 000|
|Total capital gains||R165 000|
|Less: Annual exclusion||(R40 000)|
|Apply inclusion rate (40%)||R50 000|
|Total taxable income||R230 000|
|Rate of tax||2015||2016-2017||2018-2024|
|All taxable income||40%||41%||45%|
Special trusts are taxed at the rates applicable to individuals, but are not entitled to any rebate. The 40% inclusion rate for a taxable capital gain applies to both types of special trusts and 80% inclusion rate for normal trusts.
A special trust is one created:
- Solely for the benefit of a person affected by a mental illness or serious physical disability which prevents that person from earning sufficient income to maintain him/herself. Where the person for whose benefit the trust was established dies prior to or on the last day of the year of assessment, the trust will no longer be regarded as a special trust; or
- As a testamentary trust established solely for the benefit of minor children who are alive and related to the deceased on the date of death. Where the youngest beneficiary turns 18 years of age prior to or on the last day of the year of assessment, the trust will no longer be regarded as a special trust.
What is Section 7C?
Section 7C is an anti-avoidance provision designed to prevent avoidance of both donations tax and estate duty through low or no interest loans granted to trusts.
Implications of Section 7C?
SARS will deem the interest foregone on a loan to a trust where the interest is less than the official interest rate, as a donation. This donation is deemed to be made on the last day of the year of assessment of the trust and will be subject to donation tax.
The lender must be either a connected natural person or a company who granted the loan at the instance of that natural person. This applies to all loan account balances on or after 1 March 2017.
The provision does not apply to loans granted to a trust for the purchase of the lender’s or the spouse’s primary residence.
The official interest rate is linked to the repurchase rate plus 1% and is published on the SARS website. The most recent changes are as follows:
|Date from||Date to||Rate|
|01.02.2023||Until change in Repo* rate||8.25%|
Loans by non-residents are not subject to the effect of donations tax as a result of Section 7C since non-residents are exempt from donations tax. Loans from non-residents may nonetheless be subject to transfer pricing provisions.
Distributions to non-residents are fully taxable in the trust at the trust’s applicable tax rate.
(Unless otherwise stated, financial years ending on any date between 1 April 2023 and 31 March 2024)
|Basic rate (other than entities specified below)||27%|
Small Business Corporations (annual turnover of R20 million or less):
Financial years ending on any date between 1 April 2023 and 31 March 2024
|Taxable income||Rate of tax|
|R1 – R95 750||0% of taxable income|
|R95 751 – R365 000||7% of taxable income above R95 750|
|R365 001 – R550 000||R18 848 + 21% of taxable income above R365 000|
|R550 001 and above||R57 698 + 28% of the amount above R550 000|
Micro-business (elective presumptive turnover tax for qualifying annual turnover of R1 million or less):
Years of assessment commencing on 1 March 2023 or ending on 29 February 2024
|Taxable turnover||Rate of tax|
|R1 – R335 000||0% of taxable turnover|
|R335 001 – R500 000||1% of taxable turnover above R335 000|
|R500 001 – R750 000||R1 650 + 2% of taxable turnover above R500 000|
|R750 001 and above||R6 650 + 3% of taxable turnover above R750 000|
In the case of a taxpayer who is not an individual, exempt donations are limited to casual gifts not exceeding R10 000 per annum in total.
Donations between companies forming part of the same group of companies and donations to certain public benefit organisations are exempt from donations tax.
The VAT rate remained unchanged at 15%.
It is mandatory for a business to register for VAT if the total value of taxable supplies made in any consecutive twelve month period exceeded or is likely to exceed R1 million. The business must complete a VAT 101 – Application for Registration form and submit it to SARS within 21 days from date of exceeding R1 million.
A business may also choose to register voluntarily for VAT if the value of taxable supplies made or to be made is less than R1 million, but has exceeded R50 000 in the past period of 12 months.
Dividends are subject to dividends tax which is withheld from the gross dividend declared, before being paid to the beneficial owners. The entity declaring the dividend is liable for withholding the tax and paying it to SARS.
The following rates are applicable:
|Beneficial owner||Dividend withholding tax rate|
|Non-resident individuals and companies||Refer to tax rates per South African DTA Agreements – available on the SARS website|
- The taxable value is 3.5% of the determined value (the cash cost including VAT) of each vehicle per month. Where the vehicle is:
- the subject of a maintenance plan when the employer acquired the vehicle the taxable value is 3,25% of the determined value; or
- acquired by the employer under an operating lease, the taxable value is the cost incurred by the employer under the operating lease plus the cost of fuel.
- 80% of the fringe benefit 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.
- On assessment, the fringe benefit for the tax year is reduced by the ratio of the distance travelled for business purposes, substantiated by a log book, divided by the actual distance travelled during the tax year.
- On assessment further relief is available for the cost of licence, insurance, maintenance and fuel for private travel, if the full cost thereof has been borne by the employee and if the distance travelled for private purposes is substantiated by a log book.
Interest-free or low-interest loans
The difference between interest charged at the official rate, and the actual amount of interest charged, is to be included in gross income.
- The value of the fringe benefit to be included in gross income is the lower of the benefit calculated by applying a prescribed formula, or the cost to the employer if the employer does not have full ownership of the accommodation.
- The formula will apply if the accommodation is owned by the employee, but it does not apply to holiday accommodation hired by the employer from non-associated institutions.
Securities transfer tax (STT) is payable upon the transfer of unlisted shares. This includes the buying back, redemption or cancellation of shares. STT is levied at 0.25% of the value of the shares transferred and is due within two months after the end of the month in which the shares were transferred.
R190 per passenger departing on international flights, excluding flights to Botswana, Lesotho, Namibia and eSwatini, in which case the tax is R100.
A skills development levy is payable by employers at a rate of 1% of the total remuneration paid to employees. Employers paying annual remuneration of less than R500 000 are exempt from the payment of Skills Development Levies.
- Unemployment insurance contributions are payable monthly by employers, on the basis of a contribution of 1% by employers and 1% by employees, based on the employees’ remuneration below a certain amount
- Employers not registered for PAYE or SDL must pay the contributions to the Unemployment Insurance Commissioner.
- The proposed UIF ceiling limit increase is R17 711.58 per month.
- Effective since 1 June 2021, under section 6(2) of the Unemployment Insurance Contributions Act, 2002 (Act No. 4 of 2002), the UIF contributions amount shall not apply to so much of the remuneration paid or payable by an employer to an employee during any month, as exceeds R17 712.
A provisional taxpayer is any person who earns income by way of remuneration from an unregistered employer, or income that is not remuneration, or an allowance or advance payable by the person’s principal. An individual is not required to pay provisional tax if he or she does not carry on any business, and the individual’s taxable income:
- Will not exceed the tax threshold for the tax year; or
- From interest, dividends, foreign dividends, rental from letting of fixed property, and remuneration from an unregistered employer will be R30 000 or less for the tax year.
Provisional tax returns showing an estimation of total taxable income for the year of assessment are required from provisional taxpayers.
Deceased estates are not provisional taxpayers.
|Value of estate||Rate|
|R0 to R30 000 000||20% of the dutiable amount of a deceased estate|
|Exceeding R30 000 000||25% of the dutiable amount of a deceased estate|
Estate duty is levied on the dutiable amount of a deceased estate (property of residents and SA property of non-residents). Deductions include: a standard abatement of R3.5 million per estate (R7 million for a married couple) and certain other deductions, the most important of which is the deduction for property accruing to a surviving spouse.
Paid on acquisition of immovable property where the transaction is not subject to VAT. Transfer duty is also payable on the acquisition of residential property through an interest in a company or trust. The rates of duty are as follows:
Years of assessment commencing on 1 March 2023 or ending on 29 February 2024.
|Value of property||Rate|
|R1 – R1 100 000||0%|
|R1 100 001 – R1 512 500||3% of the value above R1 100 000|
|R1 512 501 – R2 117 500||R12 375 + 6% of the value above R 1 512 500|
|R2 117 501 – R2 722 500||R48 675 + 8% of the value above R2 117 500|
|R2 772 501 – R12 100 000||R94 075 +11% of the value above R2 722 500|
|R12 100 001 and above||R1 128 600 + 13% of the value exceeding R12 100 000|
|Other payments to non-residents|
|Sportsmen and entertainers who perform in SA||15%|
|Fixed property acquired in SA from a seller that is a non-resident:|
|If the non-resident is a natural person||7.5%|
|If the non-resident is a company||10%|
|If the non-resident is a trust||15%|
|Rate of interest (from 1 February 2023)||Rate|
|Fringe benefits – interest-free or low-interest loan (official rate)||8.25% p.a.|
|Rate of interest (from 1 March 2023)||Rate|
|Late or underpayment of tax||10.50% p.a.|
|Refund of overpayment of provisional tax||6.50% p.a.|
|Refund of tax on successful appeal or where the appeal was conceded by SARS||10.50% p.a.|
|Refund of VAT after prescribed period||10.50% p.a.|
|Late payment of VAT||10.50% p.a.|
|Customs and Excise||10.50% p.a.|