No fireworks

Disclaimer: Please note that this article is at least 12 months old.
Any information herein was accurate when published on 19 February 2008

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BDO Spencer Steward Tax Services is not expecting any fireworks in the 2008 budget. The provisions on preliminary taxation could also be changed to come down on companies who abuse the framework of the Tax Act to pay less tax.

BDO Spencer Stward Tax Services director, Kemp Munnik says the winners in this year's budget would again be the low income group. The losers would be top individual earners.

Tax incentives for home-coming expatriates would be a great idea to get skills back into the country and prevent skilled people from leaving. Tax breaks or incentives would go a long way to alleviate the skills shortage crisis. With regard to the public and government the restriction of the deduction in respect of the contribution to pension or retirement fund should be decreased. This would be an automatic incentive for people to save and savings are good for the economy.

With regard to the pensioners, BDO Spencer Steward would like to see a decrease of the age limit from 65 to 55 to be in line with the rest of the provisions of the Act. Currently the amount exempted from tax is R30 000. “If the age limitation could be decreased it would mean that more people would be interested in saving money to get the interest exemption, which in turn would be positive for the economy” says Munnik.

According toMunnik, legislation with regard to medical aid deductions is regarded as too complex. A reassessment to simplify the legislation would make it more accessible to all concerned. It is furthermore important for the country as a whole that the uncertainty around the Motor Industry Development Policy (MIDP) be clarified.

On a lighter note South Africans would be willing to pay more tax to have electricity in their homes and industries.

Macro economic issues which have an effect on the economy are interest rates that continue to climb and their influence on inflation. The hike in interest rates contains many negatives.

BDO Spencer Steward Tax Services is aware of telephone audits being conducted by SARS. This is unusual and disturbing. Certain questions are posed by a person who identifies himself as an employee of SARS. A worrying factor is that it is difficult to be certain that one is in fact dealing with SARS. Tax clients are advised not to participate in these telephone audits, but rather request that questions be posed in writing, for example by e-mail, and to get their tax advisers involved.

On the international front, the so-called recession in the USA has blown over to South Africa. Input costs are rising on a weekly basis, and the steady fuel increase has a negative impact on inflation. Higher inflation has an impact on taxes, which put some people in a higher tax bracket.

BDO Spencer Steward is a regional association of independent member firms of BDO International, a worldwide network of public accounting firms, called BDO Member Firms, serving international clients. Each BDO Member Firm is an independent legal entity in its own country.  In Southern Africa, BDO has member firms in South Africa, Mozambique, Namibia, Botswana, Zambia and Zimbabwe

BDO Spencer Steward is part of the BDO International network, Member of the Forum of Firms.

Disclaimer: Please note that this article is at least 12 months old.
Any information herein was accurate when published on 19 February 2008