At a glance – how will my taxes be affected in the Feb 2024 tax year as an individual?

If I am an individual registered taxpayer in South Africa earning taxable income of above R 1 million per annum, I am one of only 408,288. Together with my fellow 408,287 individual taxpayers we contribute 43.9% of the total income tax collected from individual taxpayers in the country.

How will my continued contribution to tax be affected immediately in the next year?

At a glance my basic income tax liability as an individual aged below 65 at the illustrated taxable income levels compare as follows year-on-year:

Taxable income Tax at 2023 rates Tax at 2024 rates
R 500,000 R 103,405 R 100,272
R 1,000,000 R 297,811 R 292,284
R 2,000,000 R 718,547 R 709,604

Solar investments:

If I used R 100,000 of my after tax money to invest in solar panels last year, I would not have enjoyed any tax relief.

Should I have delayed that investment to the 2024 year of assessment, I would have been entitled to a tax refund of R 15,000.

While this proposal is welcomed, we were hoping for a bolder response from Treasury given the magnitude of the electricity crisis and its impact on the country’s economy.

Medical credits:

Medical credits are increased by 4.9% from R347 to R364 per month for the first two members, and from R234 to R246 per month for additional members.

Lump sums:

Tax levied on retirement lump sum benefits enjoys an inflationary reduction.

If I retired from my provident fund in say September 2022 receiving a lump sum of R 2 million, I would have suffered tax thereon amounting to R 483,750. If I retire with the same lump sum after February 2023, I will suffer tax amounting to R 447,750.

Transfer duty:

Transfer duty levied on property transfers enjoys an inflationary reduction.

This means that if I bought a property in say August 2022 for R 3 million, I would have paid transfer duty of R 146,000. If I buy the same property at the same price after February 2023, I will pay transfer duty of R 127,600.

Fuel levy:

Fuel levies remain unchanged.

The carbon fuel levy however increases by 1c to 10c/l for petrol and 11c/l for diesel from 5 April 2023.

If I cover a distance of 20,000km by car for the year and my car uses 10litres of fuel per 100km, the carbon tax levy increase will only cost me an additional R 20 for the year.

This should be considered in light of the fact that at the current petrol price, that distance will cost me in the region of R 44,000 in petrol alone. Six years ago, it would have cost me in the region of R 27,000, equating to annual petrol price inflation over this period of roughly 8.5%.

Sin taxes:

Other than for the exclusion of a few items these taxes will see an inflationary increase of 4.9%.

It is perhaps worth pointing out at this point that Treasury’s inflation data does not seem to align with that of the Reserve Bank.

Retirement fund savings:

Disappointingly the annual exemption on interest earned by individuals younger than 65 years remains at R23,800 and for individuals 65 years and older also remaining at R34,500.

The annual contribution limit to tax-free investments also remains at R36 000 with the total limit remaining at R 500,000.

Deductible retirement fund contributions also remain capped at R350 000 per or 27.5 per cent of taxable income per annum, whichever is the lower.

We would have welcomed inflationary adjustments to these, even at Treasury’s inflation rate, in light of the country’s poor savings record.

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