How will the February 2019 budget affect you ?
By now the budget speech and outcomes for the 2019/2020 year is old news. So how will personal tax, medical credits and taxes on fuel impact you?
For the first time since the early 1990’s there will be no inflationary adjustment on the personal income tax rates. This means the personal tax brackets have not changed, and the tax-free threshold increased marginally by 1.1% due to the increase in rebates. The rebate for the tax-free threshold for those under 65 years increased from R78,150 to R79,000; and those over 65 (under 75) will increase from R121,000 to 122,300. Although it would appear that we have had some benefit from the increased tax threshold and rebates it will not translate to a out of pocket saving if you are lucky enough to benefit from a salary increase this year. In short, the threshold increased by a marginal 1.1%, but if you receive a 5% salary increase you will pay more income tax.
The inclusion rate for Capital Gains Tax also remained unchanged at 40 % for individuals and 80% for Trusts. What does this mean for you? Should an individual dispose of an asset and realise a Capital gain of R100,000; R40,000 of the gain is added to your taxable income and then taxed at your marginal tax rate (between 18% and 45%).
There was no change in the monthly amount you can deduct for your medical scheme contribution. The monthly amount deductible remains at R310 for the first two members in your household, and R209 per person thereafter. Given that membership fees increase every year, this probably means you will still have to fork out more. For those of you that attend to your own personal tax submissions, please ensure to obtain the medical certificate from your medical aid and only claim out of pocket medical expenses if you have the documentation for all claims. It is important to note that out of pocket medical expenses that may be claimed on your personal tax includes the following only:
- medical practitioner, dentist, optometrist, homeopath, naturopath, osteopath, herbalist, physiotherapist, chiropractor, or orthopaedist for professional services rendered or medicines supplied to the person or any dependant of the person;
- (ii) nursing home or hospital or any duly registered or enrolled nurse, midwife or nursing assistant (or to any nursing agency in respect of services of such nurse, midwife or nursing assistant) in respect of the illness or confinement of the person or any dependant of the person; or
- (iii) pharmacist for medicines supplied on the prescription of any person mentioned in subparagraph (i) for the person or any dependant of the person
Carbon fuel levy
Getting to work to earn an income to pay tax will now cost you more. In addition to a new hike of 15c per litre in the general fuel levy, plus an increase of 5c a litre in the Road Accident Fund (RAF) levy, you will now also have to pay a carbon fuel levy of 9c a litre on petrol and 10c on diesel. In total, fuel levies will increase by 29 cents per litre for petrol and 30 cents per litre for diesel.