Tax changes for 2015 – what you need to know

When most people think of tax, the feeling is a resounding cringe which creeps down to the pit of their stomachs. In truth, few people understand tax, and even less have a positive view of it. In essence, though, the tax man is not out to get you – and in theory the tax you pay on goods and services each day is used to build schools, provide essential services and uplift local communities.

But of course, tax is not something that’s static, and changes to personal income tax are made on a regular basis. It is important to stay abreast of these changes.

We’ll give you the lowdown.

Personal income tax

The new tax year saw a few changes for personal income tax. Taxpayers earning more than R181 900 per year will see a 1% increase in income tax while the minimum rate of tax remains at 18% for taxable income below this annual cap. The maximum marginal rate for natural persons has hiked to 41% – this is reached when taxable income exceeds R701 300.

Tax-free savings accounts

A new addition for South Africans is the introduction of Tax-Free Savings Accounts by the National Treasury. These accounts will be a great incentive to encourage savings and will significantly increase individual returns.

In a nutshell:

• all proceeds from these accounts are tax free
• individuals are allowed two tax-exempt savings accounts per year which can invest in equities, fixed
• income accounts or both
• tax exemption for these accounts will be capped at R30 000 per annum up to a R500 000 per lifetime
• parents can open tax-free savings accounts for their children

Disability and loss of income protection

The Income Tax Act will standardise the treatment of insurance policies which provide disability or income protection. Premiums for these policies are no longer tax deductible but, unlike previous tax seasons, claims for these benefits will no longer be taxed.

In short, these changes should have a positive effect on your cash flow and serve to improve the financial wellness of all South Africans.

If you require any South African tax services, feel free to contact us for swift and reliable service.

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