The document summarizes key aspects of the South African 2014 budget including: - Expected budget deficit of 4% of GDP narrowing to 2.8% by 2016/17 with debt stabilizing at 44.3% of GDP. - Over the next 3 years, R410 billion will be spent on social grants and other spending includes education, infrastructure, and HIV/AIDS programs. - Personal income tax relief of R9.3 billion with tax thresholds and rebates increasing. The fuel levy will increase by 20 cents. - Reforms to retirement funds including taxing employer contributions and increased tax deductions for retirement savings up to R350,000 annually. - Small business tax relief with increased turnover threshold

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Agenda
• Budget 2014 highlights
• Budget 2014 - Individual Taxes
• Budget 2014 – retirement funds

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Budget framework
• -- Budget deficit of four percent of GDP expected for 2013/14,
narrowing to 2.8 percent in 2016/17;
• -- Debt stock as percentage of GDP to stabilise at 44.3 percent in
2016/17;
• -- Tax revenue for 2013/14 expected to be R1 billion higher than
projected in 2013 budget;
• -- Real growth in non-interest spending to average 1.9 percent over
next three years;
• -- National and provincial government expenditure on travel,
catering, consultants and other administrative payments declines as
a share of spending;
• -- Expenditure ceiling commits government to spending limits of
R1.03trn in 2014/15, R1.11trn in 2015/16 and R1.18trn in 2016/17.

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Spending programmes
• Over next 3 years:
-- R410bn on social grants;
-- R15.2bn on the economic competitiveness and support package;
-- R8.5bn on the Community Work Programme;
-- R8.7bn on settlement of land restitution claims;
-- R7bn for subsistence and smallholder farmers;
-- R78bn on university subsidies and R19.4bn for the National
Student Financial Aid Scheme;
-- R34.3bn on school infrastructure;
-- R22.9bn to upgrade commuter rail services;
-- R143.8bn to support municipal infrastructure;
-- R42bn on the HIV and Aids conditional grant.

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Tax proposals
-- Personal income tax relief of R9.3bn;
-- Adjustments to tax tables relating to retirement lump-sum
payments;
-- Measures to encourage small enterprise development;
-- Clarity on valuation of company cars for fringe-benefit tax
purposes;
-- Reforms to tax treatment of the risk business of long-term
insurers;
-- Amending rules for VAT input tax to combat gold smuggling;
-- Measures to address acid mine drainage;
-- Adjustment of the proposed carbon tax and its alignment with
desired emission-reduction outcomes identified by the
environmental affairs department.

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Budget highlight
0
200
400
600
800
1 000
1 200
1 400
Revenue Spending
1099.2
1252.3
Budget 2014/15 (in R bn)

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Budget highlight
• Personal tax threshold R70,700 (R67,111)
• Fuel levy up 20c
• Social grants up by 9%
• Medical aid credit R257 first two/R172
additional
• Consider making transfer to preservation fund
compulsory when changing employer

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Budget highlight
• Youth employment incentive implemented
beginning of this year
• Encourage investments and trades with Africa

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Individual Taxes

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Individual taxes – younger than 65

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Personal income tax rate
Taxable Income (R) Rates of tax
R0 – R174,550 18%
R174,551 – R272,700 25%
R272,701 – R377,450 30%
R377,451 – R528,000 35%
R528,001 – R673,100 38%
R673,101 + 40%

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Individual taxes
Rebates
Primary (Under age 65) R12,726
Secondary (65 – 75) R7,110
Tertiary (age 75 and over) R2,367
Tax threshold
Below age 65 R70,700
Age 65 – 75 R110,200
Age 75 and over R123,350

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Individual taxes
• Interest and dividend income
– Annual exemption on interest R23,800 (age <65)
and R34,500 (age 65+)
• Medical aid tax credit
– R257 (R242) for first 2
– R172 (R162) for each additional

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Individual taxes
• Retirement fund lump sum withdrawal
benefits – adjustments
Taxable income (R) Rate of Tax
0 – 25,000 0%
25,001 – 660,000 18%
660,001 – 990,000 27%
990,001 + 36%

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Individual taxes
• Retirement fund lump sum benefits or
severance benefits – bigger adjustments
Taxable income (R) Rate of Tax
0 – 500,000 0%
500,001 – 700,000 18%
700,001 – 1,050,000 27%
1,050,001 + 36%

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Retirement fund reforms
• From March 2014 2015:
– Employer contributions as taxable fringe benefits
in the hands of the employee
– Individuals allowed 27.5% of the higher of taxable
income or employment income as deduction, for
contributions to pension, provident and
retirement annuity funds
– Maximum annual deduction R350,000
– Tax-preferred savings and investment accounts in
2015 2014

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Retirement fund reforms
• From March 2014:
– Retirement funds must identify appropriate
preservation funds for exiting members
– Must guide members of converting savings into a
regular income after retirement
– More competition promoted to sell living
annuities
– Tax treatment of pension, provident and
retirement annuity funds simplified and
harmonised

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Retirement fund reforms
• From March 2014:
– Vested benefits protected

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Small business tax relief
• Turnover threshold R20m (R14m)
Taxable income (R) Rate of tax
0 – 67,111 0%
67,112 – 365,000 7%
365,000 – 550,000 21%
550,000 + 28%

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Where the budget money comes from
34%
8%
20%
27%
5%
6%
Source
Personal Income Tax
Excise Duties & Customs
Corporate Tax
VAT
Fuel
Other