Budget Tax Proposals and Update

Dividend Withholding Tax

As announced previously, the dividend withholding tax will come into effect on 1 April 2012, bringing an end to the secondary tax on companies. Pension funds that are exempt from income tax will receive their dividends tax free. For equity reasons it is proposed that the dividend withholding tax come into effect at 15 % per cent – five percentage points higher than the previous secondary tax on companies’ rate. Income from capital can be derived as interest income, dividends or capital gains, all of which should be taxed equitably.

Increase in Effective Capital Gains Tax Rates

To enhance equity, effective capital gains tax rates will be increased. The inclusion rate for individuals and special trusts will increase to 33.3 per cent, shifting their maximum effective capital gains tax rate to 13.3 per cent. The inclusion rate for other entities (companies and other trusts) will increase to 66.6 per cent, raising the effective rate for companies to 18.6 per cent and for other trusts to 26.7 per cent. These changes will come into effect for the disposal of assets from 1 March 2012.

To limit the impact of capital gains taxation on middle-income households, the exemption thresholds for individual capital gains and for primary residences will be adjusted significantly. The following exemptions for individual capital gains are increased from 1 March 2012:

  • The annual exclusion from R20 000 to R30 000
  • The exclusion amount on death from R200 000 to R300 000
  • The primary residence exclusion from R1.5 million to R2 million
  • The exclusion amount on the disposal of a small business when a person is over age 55 from R900 000 to R1.8 million
  • The maximum market value of assets allowed for a small business disposal for business owners over 55 years increases from R5 million to R10 million.

 

EMP501 PAYE Interim Reconciliation

We are halfway through the 2013 tax year, which means it is time to submit the Employer Reconciliation Declaration (EMP501) and the Employee Income Tax Certificates (IRP5/IT3(a)s) for the 6 month transaction period 1 March 2012 to 31 August 2012.

This reconciliation involves the Monthly Employer Declarations (EMP201) submitted, the payments made to SARS with regards to PAYE and UIF, and the IRP5/IT3(a)s generated.

Who has to submit the interim EMP501 declaration?
All business entities who are registered for PAYE and pay salaries/wages to employees.

How is the reconciliation done and sent to SARS?
By using the e@syFile employer software.

Must the half-year IRP5/IT3(a)s be issued to the employees?
No, the certificates generated for the transaction period 1 March 2012 to 31 August 2012 are merely for reconciliation purposes and are not to be distributed to the employees involved.

When is the deadline?
All submission are due by 31 October 2012. Penalties and interest will be charged for late or non-submission