1 00:00:00,040 --> 00:00:03,240 Speaker 1: Personal income tax brackets, and they were announced in the 2 00:00:03,279 --> 00:00:07,240 Speaker 1: twenty twenty six budgets. Many may be expecting some welcome relief, 3 00:00:07,400 --> 00:00:11,879 Speaker 1: but the April pay slip may tell a very very 4 00:00:11,920 --> 00:00:15,360 Speaker 1: different story. Essentially, while the three point four percent adjustment 5 00:00:15,400 --> 00:00:19,799 Speaker 1: to tax brackets aligns with inflation, there is more beneath 6 00:00:19,800 --> 00:00:22,959 Speaker 1: the surface, as the tax relief is often canceled out 7 00:00:23,320 --> 00:00:26,759 Speaker 1: by the rising costs. Tanya Toosen is a tax and 8 00:00:26,880 --> 00:00:31,040 Speaker 1: remunerations specialist at Tax Consulting South Africa. Joins us on 9 00:00:31,040 --> 00:00:33,440 Speaker 1: the line. Welcome Tania, great to have you with us. 10 00:00:34,040 --> 00:00:35,639 Speaker 2: Thank you very much for having me on the show 11 00:00:35,760 --> 00:00:36,200 Speaker 2: this morning. 12 00:00:36,600 --> 00:00:38,800 Speaker 1: I think we should just go through some of the 13 00:00:38,880 --> 00:00:43,879 Speaker 1: issues and then just maybe find out more about how 14 00:00:43,880 --> 00:00:46,239 Speaker 1: that's going to reflect on our pay packets. Let's look 15 00:00:46,280 --> 00:00:50,000 Speaker 1: at the tax free threshold under sixty five. What is 16 00:00:50,040 --> 00:00:51,240 Speaker 1: that and what does that mean? 17 00:00:53,000 --> 00:00:56,800 Speaker 2: Right? So the text from the extreme threshold and the 18 00:00:56,800 --> 00:01:02,120 Speaker 2: sixty five apologies and at the moment is ninety nine 19 00:01:02,120 --> 00:01:06,280 Speaker 2: thousand Rand for the twenty twenty seven tax years. So 20 00:01:06,360 --> 00:01:08,520 Speaker 2: the tax years obviously started from the first of March, 21 00:01:08,520 --> 00:01:11,760 Speaker 2: which ends in February next year. So what that means 22 00:01:11,920 --> 00:01:16,559 Speaker 2: is essentially if you're taxable income falls below ninety nine 23 00:01:16,560 --> 00:01:21,040 Speaker 2: thousand rand, because we get an annual rebate of seventeen thousand, 24 00:01:21,080 --> 00:01:24,720 Speaker 2: eight hundred and twenty for individuals under sixty five years old. 25 00:01:25,800 --> 00:01:29,520 Speaker 2: Essentially you have a zero tax liability. 26 00:01:29,600 --> 00:01:32,959 Speaker 1: So okay, under sixty five, if you are earning up 27 00:01:33,000 --> 00:01:38,360 Speaker 1: to ninety nine thousand per anim, there's zero tax liability. Correct, 28 00:01:38,640 --> 00:01:40,959 Speaker 1: and that's come from ninety five thousand issue. 29 00:01:41,480 --> 00:01:41,920 Speaker 2: Correct. 30 00:01:42,240 --> 00:01:45,920 Speaker 1: Okay, let's talk about a primary rebate. Explain to us 31 00:01:45,959 --> 00:01:46,600 Speaker 1: what that is. 32 00:01:47,760 --> 00:01:51,160 Speaker 2: So the primary rebate is exactly what I've explained. And 33 00:01:51,240 --> 00:01:54,680 Speaker 2: then when you are sixty five years and older, if 34 00:01:54,680 --> 00:01:57,080 Speaker 2: you turn that age within the tax year, you get 35 00:01:57,080 --> 00:02:01,360 Speaker 2: an additional rebate or the secondary rebate, and then if 36 00:02:01,360 --> 00:02:04,440 Speaker 2: you're seventy five years and older, you get a tertiary 37 00:02:04,520 --> 00:02:08,120 Speaker 2: rebate in addition to the primary and secondary rebates. So 38 00:02:08,240 --> 00:02:14,080 Speaker 2: eventually your text threshold is different depending on your age. 39 00:02:14,840 --> 00:02:17,880 Speaker 1: Okay, So I'm just reading that it's increased to seventeen 40 00:02:18,240 --> 00:02:19,600 Speaker 1: eight hundred and twenty rand. 41 00:02:20,360 --> 00:02:22,440 Speaker 3: Where does that apply? Who does that apply to? 42 00:02:23,720 --> 00:02:27,840 Speaker 2: So if we an individual or employee in South Africa 43 00:02:28,000 --> 00:02:30,840 Speaker 2: is earning a salary, this is already a factored into 44 00:02:30,919 --> 00:02:35,880 Speaker 2: your payroll and basically, in instance, what that rebate does is 45 00:02:35,919 --> 00:02:41,280 Speaker 2: it reduces your your and your text livability. But last 46 00:02:41,360 --> 00:02:44,520 Speaker 2: year it was seventeen thousand, two hundred and thirty five rand, 47 00:02:44,600 --> 00:02:47,760 Speaker 2: and it's moved to seventeen thousand, nine hundred and twenty rand. 48 00:02:48,440 --> 00:02:49,960 Speaker 2: So giving us slast relief. 49 00:02:50,440 --> 00:02:54,600 Speaker 1: I'm negligible, Yes, indeed, yes absolutely, and I can I 50 00:02:54,600 --> 00:02:57,600 Speaker 1: can see how where the concerns are that the inflation 51 00:02:58,919 --> 00:03:03,799 Speaker 1: has eroted whatever if it's you know, will accrue to us. 52 00:03:04,680 --> 00:03:08,119 Speaker 1: Let's just also talk about medical scheme fees, tax credits. 53 00:03:08,120 --> 00:03:10,280 Speaker 3: How how are people going to be impacted there? 54 00:03:12,200 --> 00:03:16,519 Speaker 2: Yeah, so even though the medical aid tax credits were increased, realistically, 55 00:03:16,600 --> 00:03:20,919 Speaker 2: if we look at the Discovery medical Aid contributions, with 56 00:03:21,120 --> 00:03:25,320 Speaker 2: Discovery being the main service provider providing medical aid across 57 00:03:25,320 --> 00:03:29,440 Speaker 2: South Africa, their contributions increased from the first of April, 58 00:03:30,360 --> 00:03:33,520 Speaker 2: and they published that most of the schemes will increase 59 00:03:33,600 --> 00:03:38,800 Speaker 2: between seven and eight percent on a monthly basis. But 60 00:03:39,160 --> 00:03:42,240 Speaker 2: the essence of this is that even though the tax 61 00:03:42,320 --> 00:03:44,880 Speaker 2: tables gather us to release up to three and a 62 00:03:44,960 --> 00:03:48,960 Speaker 2: half percent or three point four percent, realistically that's been 63 00:03:49,080 --> 00:03:54,000 Speaker 2: totally wiped out with our medical aid increases that are 64 00:03:54,160 --> 00:04:00,000 Speaker 2: sectors now and in addition in sangays. Realistically, what people 65 00:04:00,160 --> 00:04:03,160 Speaker 2: or don't realize is over the past two years where 66 00:04:03,160 --> 00:04:07,000 Speaker 2: the tax tables weren't adjusted for inflation, what that means 67 00:04:07,040 --> 00:04:10,840 Speaker 2: practically is even individuals who were below the tax threshold, 68 00:04:11,360 --> 00:04:15,160 Speaker 2: never paying taxes, have been pulled into that tax net. 69 00:04:15,520 --> 00:04:20,679 Speaker 2: So are feeling the pinch. You know, I've often spoken 70 00:04:20,720 --> 00:04:24,120 Speaker 2: about this last year in radio, where people have received 71 00:04:24,240 --> 00:04:28,000 Speaker 2: increases and they go to the shops, we see the 72 00:04:28,040 --> 00:04:30,919 Speaker 2: cost of living increasing and they say, but my increase 73 00:04:31,000 --> 00:04:35,240 Speaker 2: is worth nothing. So realistically, what they don't understand is 74 00:04:35,320 --> 00:04:38,480 Speaker 2: when you break down the mechanics of the tax table, 75 00:04:38,960 --> 00:04:41,480 Speaker 2: part of that increase might have pushed them into a 76 00:04:41,600 --> 00:04:45,800 Speaker 2: higher tax bracket and therefore eroding part of that increase, 77 00:04:46,440 --> 00:04:49,240 Speaker 2: or you've been pulled into the tax net as well. 78 00:04:49,640 --> 00:04:52,920 Speaker 2: So it's that classic case of we're all being pushed 79 00:04:52,920 --> 00:04:56,320 Speaker 2: into higher tax brackets. But then even though we're giving 80 00:04:56,320 --> 00:05:00,240 Speaker 2: this small inflation relief, it's constantly being a row did 81 00:05:00,600 --> 00:05:02,799 Speaker 2: by medical aid and cost of loving. 82 00:05:03,040 --> 00:05:06,640 Speaker 1: I got cha, yes, So we've got a tax fundy 83 00:05:07,000 --> 00:05:10,120 Speaker 1: with us, And you may want to chat directly to 84 00:05:10,160 --> 00:05:14,760 Speaker 1: Tanya Tocent, tax and remuneration specialist at Tax Consulting South Africa. 85 00:05:14,800 --> 00:05:17,200 Speaker 1: You're welcome to do that via WhatsApp on O seven 86 00:05:17,279 --> 00:05:19,280 Speaker 1: two five six seven one five six seven. You can 87 00:05:19,279 --> 00:05:21,440 Speaker 1: call at any time an oh to one four four 88 00:05:21,480 --> 00:05:24,800 Speaker 1: six oh five six seven. I know that there's some 89 00:05:24,839 --> 00:05:29,400 Speaker 1: adjustments to the retirement and two parts system. It's the 90 00:05:29,400 --> 00:05:31,920 Speaker 1: second y of the two part retirement system. Is is 91 00:05:31,920 --> 00:05:33,800 Speaker 1: is it not? And are they changes to it? 92 00:05:35,240 --> 00:05:35,520 Speaker 3: Yeah? 93 00:05:35,640 --> 00:05:39,599 Speaker 2: So look at SAUS and the Minister of Finance. My 94 00:05:39,880 --> 00:05:43,240 Speaker 2: multiple challenges this tax here, which was actually a wonderful 95 00:05:43,279 --> 00:05:48,599 Speaker 2: tax relief. So also encouraging South Africans to say so, 96 00:05:48,680 --> 00:05:52,840 Speaker 2: previously we were allowed to productor up to three hundred 97 00:05:52,880 --> 00:05:57,920 Speaker 2: and fifty thousand round to Annam for retirement contributions. They 98 00:05:57,960 --> 00:06:00,960 Speaker 2: have now uptacked limits to four hundred thirty thousand in 99 00:06:01,000 --> 00:06:05,440 Speaker 2: the current tax. Yes, so they are encouraging South Africans 100 00:06:05,440 --> 00:06:09,400 Speaker 2: to contribute more towards their retirement funds and getting their 101 00:06:09,440 --> 00:06:11,919 Speaker 2: tax break. But there's a bit of a double aged 102 00:06:11,920 --> 00:06:14,599 Speaker 2: sword which comes with it because of the two pot system. 103 00:06:15,120 --> 00:06:19,279 Speaker 2: So you know there's no point people pushing money into 104 00:06:19,400 --> 00:06:23,360 Speaker 2: the retirement funds and then extracting it and having that 105 00:06:23,480 --> 00:06:26,920 Speaker 2: text that their marginal tax rate with the two pot system. 106 00:06:27,760 --> 00:06:31,400 Speaker 1: Brandon wants to know, are all taxis playing South Africans 107 00:06:31,520 --> 00:06:38,200 Speaker 1: eligible for the tax rebate? All are all taxis paying 108 00:06:38,279 --> 00:06:41,240 Speaker 1: South Africans? 109 00:06:42,200 --> 00:06:44,360 Speaker 3: Sorry, I know it's. 110 00:06:44,240 --> 00:06:46,159 Speaker 1: I don't I'm not making sense of that question, but 111 00:06:46,160 --> 00:06:52,680 Speaker 1: it's fire whatsappually, But you're also drawing my attention to something. 112 00:06:53,960 --> 00:06:56,359 Speaker 3: And we will go there in a short while. 113 00:06:57,160 --> 00:06:59,960 Speaker 1: Business is going to find somebody leaf, especially small business 114 00:07:00,160 --> 00:07:05,240 Speaker 1: is around that registration, tell us about that and turnover 115 00:07:05,240 --> 00:07:07,360 Speaker 1: at tax as well. 116 00:07:07,560 --> 00:07:13,320 Speaker 2: Yeah, so again more relief. So that that registration the 117 00:07:13,400 --> 00:07:17,160 Speaker 2: limit was changed from a million rand, so now you're 118 00:07:17,160 --> 00:07:21,960 Speaker 2: only required to register for that. If you your small businesses, 119 00:07:22,440 --> 00:07:26,120 Speaker 2: you're turnover exceed two point three million range. So that's 120 00:07:26,120 --> 00:07:28,400 Speaker 2: a massive one because I mean, if you look at 121 00:07:28,400 --> 00:07:30,960 Speaker 2: when this is last amended, it was last mended in 122 00:07:31,040 --> 00:07:35,200 Speaker 2: two thousand and nine, which also is a very very 123 00:07:35,280 --> 00:07:39,000 Speaker 2: long time if you look at how our money has 124 00:07:39,200 --> 00:07:44,320 Speaker 2: devalued over time. So that has been a positive change 125 00:07:44,480 --> 00:07:46,040 Speaker 2: for small businesses as well. 126 00:07:46,960 --> 00:07:48,960 Speaker 3: We got a voice note. I think that was the message. 127 00:07:49,040 --> 00:07:50,520 Speaker 3: Let's take listen to that voice note. 128 00:07:50,560 --> 00:07:56,960 Speaker 4: Joe Hi there, Clarence, thanks for pretty good show this morning. Peace, 129 00:07:57,000 --> 00:08:03,600 Speaker 4: could you ask your expert why inflation is measured at 130 00:08:03,640 --> 00:08:07,360 Speaker 4: three percent? That real inflation which we are playing in 131 00:08:07,440 --> 00:08:12,160 Speaker 4: terms of insurance many playing way exceeds them. So how 132 00:08:12,160 --> 00:08:15,680 Speaker 4: can the government justify claiming that it's, for example, three 133 00:08:15,720 --> 00:08:18,280 Speaker 4: point one two point two percent when the real cost 134 00:08:18,280 --> 00:08:20,920 Speaker 4: of living inflation is way way above them. 135 00:08:21,800 --> 00:08:26,160 Speaker 3: Thanks Phillim Tanya your response. 136 00:08:27,680 --> 00:08:30,840 Speaker 2: That is a fantastic question, and I fully agree with 137 00:08:30,920 --> 00:08:35,160 Speaker 2: the listener. You know, if you look at you know, 138 00:08:35,200 --> 00:08:38,400 Speaker 2: the governments and the Reserve Bank when they do their analysis, 139 00:08:38,400 --> 00:08:41,240 Speaker 2: they generally based this on a basket of goods where 140 00:08:41,320 --> 00:08:45,400 Speaker 2: they look at CPI and they pinot at that three 141 00:08:45,440 --> 00:08:49,400 Speaker 2: point four percent. But I fully agree if you look 142 00:08:49,520 --> 00:08:53,199 Speaker 2: at if you just take single line items which on 143 00:08:53,280 --> 00:08:55,720 Speaker 2: massive costs, even if you take the cost of electricity, 144 00:08:55,760 --> 00:08:58,680 Speaker 2: which is going up soon at a nine percent or 145 00:08:58,720 --> 00:09:03,680 Speaker 2: closer to with medical aid, I have to fully agree. 146 00:09:03,880 --> 00:09:09,120 Speaker 2: I don't ever see experts saying it's why above. But 147 00:09:09,240 --> 00:09:13,440 Speaker 2: obviously there's obviously biggest economies of scale here in the picture. 148 00:09:13,760 --> 00:09:17,400 Speaker 2: And I'm another economist unfortunately, but this is what has 149 00:09:17,440 --> 00:09:20,680 Speaker 2: been published, and definitly agree with you when you go 150 00:09:20,720 --> 00:09:23,400 Speaker 2: to the shop, you go purchase food and your bicycne, 151 00:09:24,160 --> 00:09:26,480 Speaker 2: you definitely are not seeing an increase of three point 152 00:09:26,559 --> 00:09:28,280 Speaker 2: four things, and. 153 00:09:28,200 --> 00:09:29,720 Speaker 3: You can't argue with the shopkeeper. 154 00:09:30,200 --> 00:09:35,320 Speaker 1: No, Christal wants to be absolutely sure that he heard 155 00:09:35,520 --> 00:09:39,840 Speaker 1: you correctly. You're right, am I correct in concluding that 156 00:09:39,880 --> 00:09:43,360 Speaker 1: the seventeen eight and twenty should be added to the 157 00:09:43,400 --> 00:09:45,520 Speaker 1: primary rebate of ninety nine k. 158 00:09:47,120 --> 00:09:47,200 Speaker 3: No. 159 00:09:47,679 --> 00:09:51,880 Speaker 2: So the rebate, as I explained, it actually reduces your 160 00:09:51,960 --> 00:09:57,160 Speaker 2: annual tax lablity. Right. So if, as an example, if 161 00:09:57,200 --> 00:09:59,439 Speaker 2: I earned one hundred thousand for the year I falling 162 00:09:59,480 --> 00:10:03,319 Speaker 2: to the eighty between tax bucket, my annual tax liability 163 00:10:03,360 --> 00:10:07,439 Speaker 2: would be eighteen thousand. We would reduce that if I'm 164 00:10:07,480 --> 00:10:12,000 Speaker 2: under sixty five by seventeen thousand, eight hundred and twenty 165 00:10:12,280 --> 00:10:15,480 Speaker 2: for the current tax year, so my annual liability only 166 00:10:15,600 --> 00:10:18,000 Speaker 2: ends up being one hundred and eighty roe for the year. 167 00:10:18,720 --> 00:10:22,120 Speaker 2: That's how the rebate system works. And this is actually 168 00:10:22,200 --> 00:10:27,120 Speaker 2: already programmed into payroll systems when you receive your monkey 169 00:10:27,120 --> 00:10:27,640 Speaker 2: pace club. 170 00:10:29,080 --> 00:10:31,720 Speaker 1: Okay, now let's just have a look at we still 171 00:10:31,720 --> 00:10:36,240 Speaker 1: have what about three million people, approximately three million personal 172 00:10:36,280 --> 00:10:37,520 Speaker 1: income tax paying people. 173 00:10:38,480 --> 00:10:39,200 Speaker 3: Is that the number. 174 00:10:41,920 --> 00:10:45,480 Speaker 2: I think it's a little bit more than that. But realistically, 175 00:10:45,520 --> 00:10:49,199 Speaker 2: when you look at the breakdown of your individual tax payers, 176 00:10:49,520 --> 00:10:54,640 Speaker 2: what is concerning is that a lot of those individuals 177 00:10:54,679 --> 00:10:58,560 Speaker 2: fall below the tax threshold. So if you look at 178 00:10:58,559 --> 00:11:03,120 Speaker 2: the statistics, there's a heavy tax burden on your higher 179 00:11:03,160 --> 00:11:06,680 Speaker 2: income tax payers. Those are the individuals who earn a 180 00:11:06,840 --> 00:11:11,720 Speaker 2: five one million rant and two million and five million. 181 00:11:12,200 --> 00:11:17,720 Speaker 2: They're carrying the line sheet when it comes to fall 182 00:11:17,760 --> 00:11:20,680 Speaker 2: income taxes. So if you look at the numbers right, 183 00:11:20,960 --> 00:11:24,040 Speaker 2: there's about a six million people who fall below the 184 00:11:24,120 --> 00:11:28,640 Speaker 2: tax threshold. That's below that nineteen nine thousand rand and all. 185 00:11:28,760 --> 00:11:31,040 Speaker 2: The number of tax payers actually carrying the can in 186 00:11:31,080 --> 00:11:34,400 Speaker 2: South Africa projected for twenty six to twenty seven is 187 00:11:34,480 --> 00:11:35,720 Speaker 2: eight point three million. 188 00:11:36,080 --> 00:11:40,920 Speaker 1: That's okay, carrying the care Look I got you, So 189 00:11:41,320 --> 00:11:45,600 Speaker 1: that number of three million is is erroneous. Now let's 190 00:11:45,600 --> 00:11:49,280 Speaker 1: go to talent and global mobility, because that's the nature 191 00:11:50,480 --> 00:11:55,400 Speaker 1: of economics these days. Talent is mobile. They go where 192 00:11:55,400 --> 00:11:59,959 Speaker 1: they wanted, where they loved and paid. Well, these bracket 193 00:12:00,000 --> 00:12:02,520 Speaker 1: adjustments do they do enough to curb a brain drain 194 00:12:02,760 --> 00:12:06,000 Speaker 1: or even migration of high networth taxpayers? 195 00:12:07,320 --> 00:12:13,000 Speaker 2: Absolutely not. Karen. You know immigration stats recently that were 196 00:12:13,040 --> 00:12:18,199 Speaker 2: published by the Migration Profile Report that was released recently. 197 00:12:18,320 --> 00:12:21,880 Speaker 2: Over the last two decades, over a million South Africans 198 00:12:21,880 --> 00:12:26,520 Speaker 2: have left South Africa and forty three percent actually indicators 199 00:12:26,600 --> 00:12:29,880 Speaker 2: that they'll never come back. And what's more concerning is 200 00:12:30,080 --> 00:12:34,640 Speaker 2: most of those individuals leading South Africa have qualifications or 201 00:12:35,559 --> 00:12:41,800 Speaker 2: additional postgraduate qualifications as well. So these inflation adjustments they 202 00:12:41,840 --> 00:12:45,440 Speaker 2: are welcomed. I mean, we shouldn't be ungrateful for small mercies, 203 00:12:45,960 --> 00:12:51,840 Speaker 2: but realistically is it enough now? With as everyone is 204 00:12:51,960 --> 00:12:56,120 Speaker 2: rushing and panicking to fill up their tanks today, there's 205 00:12:56,160 --> 00:12:59,600 Speaker 2: going to be a much bigger pressure system put on 206 00:13:00,200 --> 00:13:01,640 Speaker 2: individual in South Africa. 207 00:13:02,720 --> 00:13:08,040 Speaker 5: It's like another voice note Joe Karen's regarding the tax 208 00:13:08,160 --> 00:13:13,960 Speaker 5: relief for small businesses. A question that we have is, so, 209 00:13:14,080 --> 00:13:19,080 Speaker 5: for example, you bought produce or products in the tax 210 00:13:19,200 --> 00:13:22,600 Speaker 5: here where you were still paying that and you now 211 00:13:22,760 --> 00:13:28,080 Speaker 5: qualify for that de registration, how do you how do 212 00:13:28,160 --> 00:13:31,679 Speaker 5: you do the vat novat as far as when your 213 00:13:31,720 --> 00:13:34,880 Speaker 5: tax return goes in do you do? Are they just 214 00:13:35,120 --> 00:13:39,200 Speaker 5: absolving you of then declaring that VAT on things that 215 00:13:39,280 --> 00:13:41,520 Speaker 5: are overlapping in the tax here? That you might be 216 00:13:41,640 --> 00:13:44,120 Speaker 5: using in the new tax here or is it a 217 00:13:44,160 --> 00:13:45,240 Speaker 5: bit more complicated? 218 00:13:45,400 --> 00:13:50,160 Speaker 3: Thank you sure, Tanya are your response, Karan. 219 00:13:49,960 --> 00:13:53,960 Speaker 2: It's quite a complex question. I would recommend the individual 220 00:13:54,120 --> 00:13:56,720 Speaker 2: reach out to a say more than our company's called 221 00:13:56,760 --> 00:13:59,760 Speaker 2: tax consulting, and I can put them into context with 222 00:13:59,880 --> 00:14:03,240 Speaker 2: the relevant that specialists. But unfortunately, in the tax world, 223 00:14:03,280 --> 00:14:05,800 Speaker 2: you know, we are all specialists in our own right 224 00:14:06,360 --> 00:14:09,160 Speaker 2: on certain areas. So I'm not going to unpack that 225 00:14:09,280 --> 00:14:11,600 Speaker 2: into much detail. But they're really more than welcome to 226 00:14:11,640 --> 00:14:13,520 Speaker 2: reach out to us, and we will support them on 227 00:14:13,600 --> 00:14:14,120 Speaker 2: that matter.