The 2019 election year brings the normal risk of some tax populist decisions, including much higher social grants.<\/p>\n
This is according to Jerry Botha, managing partner of Tax Consulting SA, who said that this could add to the fiscus\u2019 pressure – which is desperate for additional tax revenues.<\/p>\n
“Personal income tax, which is mostly collected from employees, is by far the largest contributor to tax in South Africa,” he said.<\/p>\n
“The goose which lays the golden egg is employees and not corporate taxes or VAT.<\/p>\n
“In 2019, we will have a new permanent Commissioner of South African Revenue Service (Sars) and new National Prosecuting Authority boss, so it takes little foresight to know that tax collection will become a key fiscal driver. With a willing NPA and perhaps political green light, the tax collection problem will be a quick fix.”<\/p>\n
Below Botha outlined five possible tax changes that South Africans should know about.<\/p>\n
National Health Insurance and medical aid credits<\/strong><\/p>\n There are promised announcements around National Health Insurance especially the funding thereof in the Budget 2019\/20, said Botha.<\/p>\n He added that taxpayers should be very concerned that this will be funded, as suggested by the government, from a reduction or removal of medical aid tax credits.<\/p>\n “Where this is done, because of how the medical aid credit system operates, it will cause an immediate take-home pay reduction for all employees.<\/p>\n “We can only hope this will not be announced, otherwise, employees will take a further direct hit, on the back of many financial setbacks over the past year.”<\/p>\n Travel reimbursement rates<\/strong><\/p>\n Botha said that the\u00a0reimbursement and tax claim limits will require proper adjustment to keep track with the reality of petrol price increases and the higher-than-normal costs associated with business-use of vehicles.<\/p>\n This is very much evident by the widening of the gap between the AA rates and the Sars-allowed rates, he said.<\/p>\n Recession and low remuneration increases<\/strong><\/p>\n “There are many employers going through restructuring and retrenchment exercises, with the direct upshot that employees should expect lower increases,” said Botha.<\/p>\n “The reality is often a choice between preserving a job vs. rightfully demanded increases. One can only hope that the Minister of Finance will give some much-needed tax relief.”<\/p>\n New financial products<\/strong><\/p>\n “We have now seen a revolution in employee remuneration by ‘Total Guaranteed Package with Flexible Benefits’, which allows an employer cost-neutral approach, but the employee can structure their remuneration to suit their personal financial requirements,” said Botha.<\/p>\n He added that there\u00a0are a number of new financial products and services – including at least three new zero or low-cost banking options planned for 2019 – so no doubt this will come with additional choices for employees.<\/p>\n Expatriate tax exemption \u2013 R1m only from 1 March 2020<\/strong><\/p>\n The change is already in law and will most definitely increase the cost for South African employers which expands internationally when using South African employees as expatriates, said Botha.<\/p>\n “In addition, the benefits and allowances provided to expatriates will often cause an additional tax burden, which becomes an employer cost in any tax equalised or tax protected policy approach.<\/p>\n “We have seen many employers proactively starting to plan for this already.”<\/p>\n
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