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Income Tax Act, 1962 (Act 58 of 1962)

Rates of Normal Tax and Rebates

* [Updated to reflect changes made by the Taxation Laws Second Amendment Act No. 18 of 2009]

 

 

Appendix I

 

PART I

 

 

1) The rate of tax referred to in section 2(1) of this Act to be levied in respect of the taxable income (excluding any retirement fund lump sum benefit) of any natural person, deceased estate, insolvent estate or special trust (other than a public benefit organisation or recreational club referred to in paragraph 5) in respect of any year of assessment ending on 29 February 2008 is set out in the table below:

 

Taxable Income

Rate of Tax

Not exceeding R112 500

18 per cent of the taxable income

Exceeding R112 500 but not exceeding R180 000

R20 250 plus 25 per cent of the amount by which the taxable income exceeds R112 500

Exceeding R180 000 but not exceeding R250 000

R37 125 plus 30 per cent of the amount by which the taxable income exceeds R180 000

Exceeding R250 000 but not exceeding R350 000

R58 125 plus 35 per cent of the amount by which the taxable income exceeds R250 000

Exceeding R350 000 but not exceeding R450 000

R93 125 plus 38 per cent of the amount by which the taxable income exceeds R350 000

Exceeds R450 000

R131 125 plus 40 per cent of the amount by which the taxable income exceeds R450 000

 

2)

 

Description

Reference to the Income Tax Act, 1962

Amount

Primary rebate

Section 6(2)(a)

R7 740

Secondary rebate

Section 6(2)(b)

R4 680

 

3) The rate of tax referred to in section 2(1) of this Act to be levied in respect of the taxable income of any trust (other than a special trust or a public benefit organisation or recreational club referred to in paragraph 5) in respect of any year of assessment ending on 29 February 2008, is 40 per cent.

 

4) The rate of tax referred to in section 2(1) of this Act, in respect of the taxable income of companies (other than a public benefit organisation or recreational club referred to in paragraph 5 or a small business corporation referred to in paragraph 6) in respect of any year of assessment ending during the twelve month period ending on 31 March 2008, is, subject to the provisions of paragraph 9, as follows:—
a) 29 per cent of the taxable income of any company (excluding taxable income referred to in subparagraphs (b), (c), (d), (e), (f) and (g)) or, in the case of such a company which mines for gold on any gold mine and which is in terms of an option exercised by it exempt from the payment of secondary tax on companies, 37 per cent;
b) in respect of the taxable income of any employment company as defined in section 12E of the Income Tax Act, 1962, 34 per cent;
c) on each rand of the taxable income derived by any company from mining for gold on any gold mine with the exclusion of so much of the taxable income as the Commissioner for the South African Revenue Service determines to be attributable to the inclusion in the gross income of any amount referred to in paragraph (j) of the definition of ‘‘gross income’’ in section 1 of the Income Tax Act, 1962, but after the set-off of any assessed loss in terms of section 20(1) of that Act, a percentage determined in accordance with the formula:

 

y = 35 —

 

or, in the case of a company which is in terms of an option exercised by it exempt from the payment of secondary tax on companies, in accordance with the formula:

 

y = 45 — 225

 

 

in which formulae y represents such percentage and x the ratio expressed as a percentage which the taxable income so derived (with the said exclusion, but before the set-off of any assessed loss or deduction which is not attributable to the mining for gold from the said mine) bears to the income so derived (with the said exclusion);

d) on each rand of the taxable income of any company, the sole or principal business of which in the Republic is, or has been, mining for gold and the determination of the taxable income of which for the period assessed does not result in an assessed loss, which the Commissioner for the South African Revenue Service determines to be attributable to the inclusion in its gross income of any amount referred to in paragraph (j) of the definition of ‘‘gross income’’ in section 1 of the Income Tax Act, 1962, a rate equal to the average rate of normal tax or 29 cents, whichever is higher: Provided that for the purposes of this subparagraph, the average rate of normal tax shall be determined by dividing the total normal tax (excluding the tax determined in accordance with this subparagraph for the period assessed) paid by the company in respect of its aggregate taxable income from mining for gold on any gold mine for the period from which that company commenced its gold mining operations on that gold mine to the end of the period assessed, by the number of Rands contained in the said aggregate taxable income;
e) on each rand of the taxable income derived by any company from carrying on long-term insurance business in respect of—
i) its individual policyholder fund, 30 per cent; and
ii) its company policyholder fund and corporate fund, 29 per cent;
f) on each rand of the taxable income (excluding taxable income referred to in paragraphs (b), (c), (d), (e), and (g)) derived by a company which is not a resident, 34 per cent;
g) on each rand of the taxable income derived by a qualifying company as contemplated in section 37H of the Income Tax Act, 1962, subject to the provisions of the said section, zero per cent:

Provided that the tax determined in accordance with any of subparagraphs (a) to (g), inclusive, shall be payable in addition to the tax determined in accordance with any other of the said paragraphs.

 

5) The rate of tax referred to in section 2(1) of this Act to be levied in respect of each rand of taxable income of any public benefit organisation that has been approved by the Commissioner in terms of section 30(3) of the Income Tax Act, 1962 (Act No. 58 of 1962) or any recreational club that has been approved by the Commissioner in terms of section 30A(2) of that Act is, in the case of an organisation or club that is a company, in respect of any year of assessment ending during the twelve month period ending on 31 March 2008 or, in the case of an organisation or club that constitutes a person other than a company, in respect of any year of assessment ending during the twelve month period ending on 29 February 2008, 29 cents.

 

6) The rate of tax referred to in section 2(1) of this Act in respect of the taxable income of any company which qualifies as a small business corporation as defined in section 12E of the Income Tax Act, 1962, in respect of any year of assessment ending during the twelve month period ending on 31 March 2008 is, subject to the provisions of paragraph 9, set out in the table below:—

 

Taxable Income

Rate of Tax

Not exceeding R43 000

0 per cent of taxable income

Exceeding R43 000 but not exceeding R300 000

10 per cent of the amount by which the taxable income exceeds R43 000

Exceeding R300 000

R25 700 plus 29 per cent of the amount by which the taxable income exceeds R300 000

 

7) The rate of tax referred to in section 2(1) of this Act to be levied on a person in respect of the taxable income comprising of any retirement fund lump sum benefit in respect of any year of assessment ending on 29 February 2008 is set out in the table below:

 

Taxable Amount

Rate of Tax

Not exceeding R300 000

18 per cent of the taxable income

Exceeding R300 000 but not exceeding R600 000

R54 000 plus 27 per cent of the taxable income exceeding R300 000

Exceeding R600 000

R135 000 plus 36 per cent of the taxable income exceeding R600 000

 

8) The rates set forth in paragraphs 1, 3, 4, 5, 6 and 7 shall be the rates required to be fixed by Parliament in accordance with the provisions of section 5(2) of the Income Tax, 1962.

 

9) For the purposes of this Appendix, income derived from mining for gold shall include any income derived from silver, osmiridium, uranium, pyrites or other minerals which may be won in the course of mining for gold, and any other income which results directly from mining for gold.

 

PART II

INCOME TAX MONETARY THRESHOLDS SUBJECT TO PERIODIC LEGISLATIVE CHANGE

10) General Savings thresholds

 

Description

(The contents of this column are solely for convenience and shall be of no force or effect)

Reference to the Income Tax Act, 1962

Monetary amount

Broad-based employee share schemes:

Employees can receive tax-exempt shares if the shares are part of a broad-based employee share plan. Companies can also deduct shares issued under the plan.



Maximum exemption for shares received by employees.

The definition of ‘‘qualifying equity share’’ in section 8B(3).

R9 000.

Maximum deduction for shares issued by the employer.

The proviso to section 11(lA).

R3 000.

Exemption for interest and certain dividends:



Exemption for domestic interest and otherwise taxable domestic collective scheme dividends in respect of persons younger than 65 years

Section 10(1)(i)(xv)(bb)(B)

R18 000

Exemption for passive portfolio savings in respect of persons of 65 years or older.

Section 10(1)(i)(xv)(bb)(A)

R26 000.

Maximum application of the above exemption for foreign interest and otherwise taxable dividends.

Section 10(1)(i)(xv)(aa)

R3 000.

Annual donations tax exemption:



Exemption for donations made by entities.

Section 56(2)(a) and the proviso thereto.

R10 000.

Exemption for donations made by individuals.

Section 56(2)(b).

R100 000.

Capital gains exclusions:



Annual exclusion for individuals and special trusts.

Paragraph 5(1) of the Eighth Schedule

R15 000.

Exclusion for the disposal of a primary residence.

Paragraph 45(1) of the 8th Schedule.

R1 500 000

Maximum market value of all assets allowed to fall within the small business definition on disposal when over 55.

Definition of ‘‘small business’’ in paragraph 57(1) of the 8th Schedule.

R5 million.

Exclusion amount on disposal of small business when over 55.

Paragraph 57(3) of the 8th Schedule.

R750 000.

Exclusion on death.

Paragraph 5(2) of the 8th Schedule

R120 000.

 

11) Retirement savings thresholds

 

Description

(The contents of this column are solely for convenience and shall be of no force or effect)

Reference to the Income Tax Act, 1962

Monetary amount

Deductible retirement fund contributions: Pension fund and retirement annuity fund members may deduct their contributions subject to certain percentage or monetary ceilings (the latter of which is provided below).



Pension fund monetary ceiling for contributions.

The proviso to section 11(k)(i)

R1 750.

Pension fund monetary ceiling for arrear contributions.

Paragraph (aa) of the proviso to section 11(k)(ii).

R1 800.

Retirement annuity fund monetary ceiling for contributions (if also a member of a pension fund).

Section 11(n)(aa)(B)

R3 500.

Retirement annuity fund monetary ceiling for contributions (if not a member of a pension fund).

Section 11(n)(aa)(C)

R1 750.

Retirement annuity fund monetary ceiling for arrear contributions.

Section 11(n)(bb)

R1 800.

Permissible lump sum withdrawals upon retirement: Pension fund and retirement annuity fund members may withdraw lump sums upon retirement.



Pension fund monetary amount for permissible lump sum withdrawals.

Paragraph (ii)(dd) of the proviso to paragraph (c) of the definition of ‘‘pension fund’’ in section 1.

R50 000.

Retirement annuity fund monetary amount for permissible lump sum withdrawals.

Paragraph (b)(ii) of the proviso to the definition of ‘‘retirement annuity fund’’ in section 1.

R50 000.

Exempt lump sum portion: Certain lump sums are partly tax free based on a formula within the Second Schedule. This formula contains input amounts as provided below.



Tax free portion of lump sum benefit

Paragraph (b) of the definition of ‘‘formula B’’ in paragraph 1 of the Second Schedule.

R300 000.

 

 

12) Deductible Business Expenses for Individuals

 

Description

(The contents of this column are solely for convenience and shall be of no force or effect)

Reference to the Income Tax Act, 1962

Monetary amount

Car allowance: Individuals receive an annual vehicle allowance to defray business travel expenses, including deemed depreciation on the vehicle.



Ceiling on vehicle cost.

Section 8(1)(b)(iiiA)(bb)(A)

R360 000.

Ceiling on debt relating to vehicle cost.

Section 8(1)(b)(iiiA)(bb)(B)

R360 000.

 

13. Employment related fringe benefits

 

Description

(The contents of this column are solely for convenience and shall be of no force or effect)

Reference to the Income Tax Act, 1962

Monetary amount

Exempt Scholarships and bursaries: Employers can provide exempt scholarships and bursaries to employees and their relatives, subject to annual monetary ceilings.



Annual ceiling for employees.

Paragraph (ii)(aa) of the proviso to section 10(1)(q).

R60 000.

Annual ceiling for employee relatives.

Paragraph (ii)(bb) of the proviso to section 10(1)(q).

R3 000.

Exempt termination benefits: Employees of age 55 or older receive exemption for employment termination-related payments subject to a monetary ceiling.

Section 10(1)(x)

R30 000.

Medical scheme contributions: Medical scheme contributions are tax deductible if the individual pays (and tax-free if the employer pays) subject to monthly ceilings.



Monthly ceiling for schemes with one beneficiary.

Section 18(2)(c)(i)(aa) & paragraph 12A(1)(a) of the 7th Schedule.

R530

Monthly ceiling for schemes with two beneficiaries.

Section 18(2)(c)(i)(bb) & paragraph 12A(1)(b) of the 7th Schedule.

R1 060.

Additional monthly ceiling for each additional beneficiary.

Section 18(2)(c)(i)(cc) & paragraph 12A(1)(c) of the 7th Schedule.

R320.

Awards for bravery and long service: The deemed value of bravery and long service awards are reduced by the monetary amount indicated.

Paragraph (b) of the further proviso to paragraph 5(2) of the Seventh Schedule.

R5 000

Employee accommodation: Employee accommodation is taxed through a formula if the employer owns the accommodation, but no tax is payable if the employee earns less than the amount indicated.

Paragraph 9(3)(a)(ii) of the 7th Schedule.

R43 000.

Exemption for de minimis employee loans: Employee loans below the amount indicated are not deemed to have any value as a fringe benefit.

Paragraph 11(4)(a) of the 7th Schedule.

R3 000.

Employer deductions for employee housing: Expenses incurred for providing employee housing is limited to the ceiling indicated (per dwelling).

Paragraph (ii) of the proviso to section 11(t).

R6 000.

Additional employer deductions for Learnerships: Employers receive additional deductions for learnerships depending on the circumstances.



For entering into a learnership with an existing employee, the additional deduction for the employer is limited to the monetary ceiling indicated.

Section 12H(2)(a)(i)(bb)

R20 000.

For entering into a learnership with a new employee, the additional deduction for the employer is limited to monetary ceiling indicated.

Section 12H(2)(a)(ii)(bb)

R30 000.

For completing a learnership (all employees), the additional deduction for the employer is limited to the monetary ceiling indicated.

Section 12H(2)(b)(ii)

R30 000.

For entering into a learnership with an existing disabled employee, the additional deduction for the employer is limited to the monetary ceiling indicated.

Section 12H(2A)(a)(i)(bb)

R40 000.

For entering a learnership with a new disabled employee, the additional deduction for the employer is limited to the monetary ceiling indicated.

Section 12H(2A)(a)(ii)(bb)

R50 000.

For completing a learnership with disabled employees, the additional deduction for the employer is limited to the monetary ceiling indicated.

Section 12H(2A)(b)(ii)

R50 000.

 

14) Depreciation

 

Description

(The contents of this column are solely for convenience and shall be of no force or effect)

Reference to the Income Tax Act, 1962

Monetary amount

Small-scale Intellectual property: Intellectual property with a cost below the amount indicated is immediately deductible.

Paragraph (aa) of the proviso to section 11(gC).

R5 000.

Urban Development Zone incentive: Developers undertaken projects in excess of the amount indicated must provide special notice to the Commissioner.

Section 13quat(10A)

R5 million

 

15) Miscellaneous

 

Description

(The contents of this column are solely for convenience and shall be of no force or effect)

Reference to the Income Tax Act, 1962

Monetary amount

Public benefit organizations:



PBO trading income is exempt up to the greater of 5 per cent of total receipts and accruals or the amount indicated.

Section 10(1)(cN)(ii)(dd)(ii)

R100 000.

Donations to transfrontier parks will be deduction only if the donation exceeds the amount indicated.

Section 18A(1C)(a)(ii)

R1 million.

Recreational clubs: Club trading income is exempt up to the greater of 5 per cent of total receipts and accruals or the amount indicated.

Section 10(1)(cO)(iv)(bb)

R50 000.

Farming:



Farmer deductions for employee housing: Expenses incurred by farmers for providing employee housing is limited to the ceiling indicated (per employee).

Paragraph 12(5) of the 1st Schedule

R6 000.

Prepaid expenses: Prepaid expenses amounts up to the amount indicated will not be deferred until delivery of goods, services or benefits.

Paragraph (bb) of the proviso to section 23H(1).

R50 000.

Small Business Corporation: Corporates will qualify for tax incentives if gross income does not exceed the amount referred to.

Section 12E(4)(a)(i)

R14 million.

 

16) Administration

 

Description

(The contents of this column are solely for convenience and shall be of no force or effect)

Reference to the Income Tax Act, 1962

Monetary amount

Interest for underpayments: If final taxable income exceeds the provisional tax paid, the taxpayer must pay interest in respect of provisional tax underpayments to the extent that taxpayer’s taxable income exceeds the amount indicated.



In the case of companies

Section 89quat(2)(a)

R20 000.

In the case of persons other than companies.

Section 89quat(2)(b)

R50 000.

Interest for overpayments: If the provisional tax paid exceeds final taxable income, the taxpayer is entitled to interest in respect of provisional tax overpayments.



Where the overpayment exceeds the amount indicated.

Section 89quat(4)(a)

R10 000

In the case of a company where the taxpayer’s taxable income exceeds the amount indicated.

Section 89quat(4)(b)(i)

R20 000.

In the case of a person other than a company where the taxpayer’s taxable income exceeds the amount indicated

Section 89quat(4)(b)(ii)

R50 000.

Investment income exemption from provisional tax: If a natural person solely generates income from interest, dividends and real estate rentals, the income amount indicated will be exempt from provisional tax.



In the case natural persons below age 65.

Paragraph 18(1)(c)(ii) of the 4th Schedule.

R10 000.

In the case of natural persons of 65 and older.

Paragraph 18(1)(d)(i) of the 4th Schedule.

R80 000.

S.I.T.E. threshold: Tax on employment income is subject to the S.I.T.E (the Standard Income Tax on Employees) system up to the amount indicated.

Items (a) and (b) of paragraph 11B(2) and items (a), (b)(ii) and (b)(iii) of paragraph 11B(3) of the 4th Schedule.

R60 000.

Automatic appeal to the High Court: The full bench of the High Court will have automatic jurisdiction to appeals if the disputed amount exceeds the amount indicated.

Section 83(4B)(a)

R50 million.