Given the economic realities facing the Minister of Finance this year, it is unsurprising that he had a difficult task balancing the need to improve tax revenue with the implications of placing additional tax burdens on the individual taxpayer.
As a result, the Minister today announced that there would be no increases to individual tax rates for 2019/2020, although there would be the usual increases in sin taxes and fuel taxes.
In contrast to what we have become accustomed over the past number of years, there will also be no adjustment to the individual tax tables to take the effects of inflation into account. In other words, there will be no adjustment to take into account the effects of bracket creep. The net result of this is that Treasury expects to collect an additional R12.8 billion. There will, however, be a very small increase in the primary, secondary and tertiary rebates of 1.1% which will offer very limited relief (R153, R234 and R261 per year, respectively).
There were also a number of matters raised in the Budget in terms of addressing some practical difficulties for employers, for example once the foreign earnings exemption changes come into effect on 1 March 2020 as well as the need for foreign employers to register as such with SARS. There will also be a slight change to the income bands that apply to the Employment Tax Incentive to take into account the National Minimum Wage Act and inflation.
Unlike in previous years, there has been no adjustment to the travel allowance tables this year, although there has been a small increase to the deemed subsistence allowance amounts which employers can pay to employees who travel overnight on employer business. In prior years, the Minister raised the prospect of doing away with the medical tax credit available to taxpayers who are members of medical aid schemes, but this year there has been no change to this credit. Unlike in previous years, there has also been no increase in this credit to take inflation into account.