[imagesource: Reuters]

Tito Mboweni delivered his 2020 budget speech yesterday, and there’s a lot to unpack there.

The speech was a mix of good and bad news. For example, government debt is on the rise as SEOs continue to bleed the country dry.

On the other hand, the threshold for properties that don’t require transfer fees has been raised to R1 million, which is good news for some first-time homeowners.

In the comments section on the live coverage of the speech on YouTube, many people were bracing themselves for bad news about taxes.

When Mboweni reached the part of the speech that delved into tax brackets, however, we were all pleasantly surprised.

Per BusinessTech, he said that there would be no major tax increases in 2020. Instead, taxpayers can look forward to some much needed personal income tax relief.

“This budget means that a teacher who earns on average R460,000 a year, will see their taxes reduced by nearly R3,400 a year,” said Mboweni.

“Hard-working taxpayers, who earn on average R265,000 a year, will see their income tax reduced by over R1,500 a year.

“Our income tax system is progressive, and the adjustments reflect this. Someone earning R10,000 a month will pay 10% less in tax. Someone earning R100,000 a month will pay about 1.5% less.”

The table below reflects the current tax rates for trusts and individuals in South Africa for the tax year starting March 1, 2020 through to February 28, 2021:

Here’s how that compares to last year’s figures:

Mboweni emphasised that the National Treasury is committed to supporting growth in South Africa.

The minister also said that the National Treasury will propose broadening the corporate income tax base. The additional revenue, he said, would be used to reduce the corporate tax in the near future to help businesses grow.

He wants to focus on start-ups and small business ventures, while at the same time tightening the screws on the VAT registration threshold and turnover tax.

If you’re a business owner, take note of the fact that SARS is gearing up for the next tax season, and they’re coming out swinging, so you’ll want to make sure you’re compliant.

To finish, rather than going cross-eyed trying to work out how the personal tax changes affect your pocket, use Fin24’s handy income tax calculator and hope for the best.

[source:businesstech]