On Tuesday 26thNovember, three taxation bills were passed by the National Assembly and the parts of legislation are set to go to the National Council of Provinces.
The new legislation formed part of Tito Mboweni’s budget announcement on 20thFebruary and over September, there have been several public hearings on the bills.
Here is a quick look at some of the prominent changes in the bills.
Rates and Monetary Amounts and Amendment of Revenue Laws Bill
Changes in rates and monetary thresholds are dealt with in this bill, for instance, increases of excise duties on tobacco and alcohol, changes to personal income tax tables and changes to the eligible income brackets that meet the criteria for the employment tax incentive.
The Standing Committee, in its report on the bill, agreed with the National Treasury and SARS that the increase in illegitimate products was due to both SARS tax administration challenges and weak law enforcement. The Committee decided to apply more focus to the monitoring of law enforcement measures on illegal tobacco trade and SARS capacity as well as calling on the government to work quicker on taxing other tobacco products like tobacco heating products and electronic cigarettes.
In regards to personal income tax, the bill aims to raise an extra R12.8 billion. This will be done through increasing the primary rebate, which will then have an effect on tax free rebates. The relief from the primary rebates increase will go towards lower income groups. Also, there will be no increase in medical tax credits to assist NHI funding and to provide extra tax revenue.
The Taxation Laws Amendment Bill
The proposals here will affect individual savings and employment tax, value added tax, business tax and the Customs and Excise Act.
The first proposal looks at revising the tax treatment of surviving spouses’ pension. The aim here is to reduce the financial pressure when calculating taxes that retirement funds may hold back on spousal pensions. The amendment will become effective on the 1stMarch 2021.
There is also a proposal to look at the Venture Capital Companies tax incentive scheme, the VCC, in terms of the permissible deduction for investors. In 2015, changes were made to the VCC scheme to broaden it and increase uptake, but this resulted in high net worth companies and individuals trying to reduce their taxable income by excessively investing in VCCs.
It will also refine the Employment Incentive Scheme so that it better aligns with the National Minimum Wage Act of 2018. In 2014, this scheme was introduced as a way to reduce the cost of hiring young adults that have no work experience with a cost sharing program with the government.
The Tax Administration Laws Amendment Bill
Technical corrections will be made in the third bill. Corrections will be made to the following acts: Customs and Excise, Income Tax, Value Added Tax and Skills Development Levies. The amendments here look at aligning time periods for refunds, dates and amounts to the Tax Administration Act.
Article Source: https://businesstech.co.za/news/finance/357407/changes-to-3-new-tax-bills-explained/