BUDGET: The 2014/2015 budget and you

HEALTH | FITNESS

Words: Peter Fairbanks

THE 2014/2015

budget and you The first quarter of 2014 has passed by in a flash

and if you still haven’t had time to digest what the 2014/2015 budget means to you and what effect it will have your daily life, here are some of the highlights.

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THE 2014/2015

budget and you

INCOME TAX:

INDIVIDUALS AND SPECIAL TRUSTS TAXABLE INCOME 0 - 174,550 174,551 - 272,700 272,701 - 377,450 377,451 - 528,000 528,001 - 673,100 673,101 and above

(R) RATES OF TAX 18% of taxable income R31,419 + 25% of taxable income above R174,550 R55,957 + 30% of taxable income above R272,700 R87,382 + 35% of taxable income above R377,450 R140,074 + 38% of taxable income above R528,000 R195,212 + 40% of taxable income above R673,100

• The tax-free portion of annual income received is as follows: • Under 65 years: R70,700 (previously R67,111) • 65 to 74 years: R110,200 (previously R104,611) • 75 years and older: R123,350 (previously R117,111) • The basic interest income exemption remains unchanged at R23,800 and SARS is in the process of implementing the ‘tax-preferred savings account’ system, which I understand will be tax free if invested in it.

More details are to follow, to give us a clearer understanding of what was proposed.

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• If you withdraw from a Retirement-, Pension- or Provident Fund before retirement age, the first R25,000 will be tax exempt.

Thereafter, the current scales will apply. What’s also in the pipeline is the fact that you will have to preserve all or a portion of Provident Fund monies at withdrawal stage. This could be a saving grace for many South Africans because in the past, you were able to withdraw all the cash from any of the funds listed above prior to retirement, and this ‘early access’ has been a large contributor to our nation’s elderly people living in poverty.

• The good news for everyone who has been diligently saving for their golden years is that when retiring from the abovementioned funds, as of 1 March 2014, the first R500,000 will be tax exempt. This once again shows how committed government is about building and supporting citizens to provide for themselves.

If you haven’t picked up on this in the last five years, then you are missing some great opportunities to invest and need to see a broker a.s.a.p.

• From next year, you will no longer be able to claim your income protection contributions as a tax deduction. However, if you do claim, the benefit will be tax free.

• From 1 March 2015, the tax dispensation for Pension-, Provident- and Retirement Funds will be aligned as follows: You will be able to deduct an amount equal to 27.5% of

taxable monthly income, to the maximum of R350,000 per annum, in total, from all of these funds.

Your employer’s contribution will be deemed a fringe benefit

as from next year.

If you have any questions concerning the above, as always, I encourage you to contact your Financial Advisor. •

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