Grant Thornton experts' comments & insights following the National Budget 2015 Speech

Grant Thornton experts provide comments and insights following Minister Nhlanhla Nene’s National Budget Speech on Wednesday 25 February 2015

General comments:

“Apart from the 1% increase across the board in the income tax rate, overall the Budget announcements by the Minister seem to be general adjustments and refinements rather than massive changes.”
Barry Visser, Director: Tax, Grant Thornton Johannesburg

On the Income Tax Rate

“We are pleased that the increase in the income tax rate is only 1%, but surprised that the increase has been imposed across all brackets, which means that all income groups, except those earning less than 181 900 are subject to a slightly higher burden of tax. Is the Minister preparing us for more significant increase in the top marginal rate in 2016?”
Anton Kriel, Tax Director, Grant Thornton Cape


“We welcome the Minister’s pledge of financial support for enterprise and skills development, particularly in the area of mentoring and training in the small business environment.”
Mike Betts, Partner: Tax, Grant Thornton Cape

“We applaud the Minister’s announcement of the introduction of a central data base which will facilitate single registration when transacting with the state. This will certainly ease the administrative burden for the business community and should have a positive impact on the establishment / formation of small and medium-sized enterprises.”
Mike Betts, Partner: Tax, Grant Thornton Cape

“The reduction in tax rates for micro businesses will be beneficial to this segment of the market and may encourage more participants to avail themselves of the turnover tax regime. However, we’re disappointed that similar benefits could not be extended to the broader small business community operating above the R1 million threshold but we assume that budget constraints probably limited the scope for such a concession.”
Mike Betts, Partner: Tax, Grant Thornton Cape

On Capital Gains Tax

“While Capital Gains Tax is not a big money spinner for our Treasury, we have received our second CGT rate increase in three years. The CGT rate increases from 13.3% to 13.65% while the effective CGT rates for trusts go up from 26.7 to 27.31%.”
Eugene du Plessis, Partner and head of Tax: Grant Thornton Johannesburg

On fuel and other road levies

“When looking for alternative ways to increase tax revenue, Government has really hit us hard at the petrol pump and on the road. The fuel levy is set to increase by 13.6% and RAF levy by a whopping 48% from 104c/l to 154c/l.”
Anton Kriel, Tax Director, Grant Thornton Cape

On foreign tax credits for foreign sourced income

“The 2015 Budget proposes removing the foreign tax credit for foreign source income. To avoid double taxation, South African businesses will once again be burdened with further red tape by having to ensure that the correct foreign withholding taxes are withheld by its clients and customers.”
Bruce Russell, Tax Consultant, Grant Thornton Cape


“The 2015 Budget proposals reaffirm the commitment to extend the REIT taxing provisions to include regulated unlisted property-owning vehicles, and not just the listed entities. We look forward to more information being provided here – it will be important to understand what regulatory framework will be created for unlisted REITs.”
Bruce Russell, Tax Consultant, Grant Thornton Cape