THUNDERLION

business SOLUTIONS

 

Budget 2010/2011

 

Taxable income Rates of tax for 2011

 

R 0 - R140 000                    18% of each R1

R140 001 - R221 000            R 25 200 + 25% of the amount over R140 000

R221 001 - R305 000            R 45 450 + 30% of the amount over R221 000

R305 001 - R431 000            R 70 650 + 35% of the amount over R305 000

R431 001 - R552 000            R114 750 + 38% of the amount over R431 000

R552 001 +                         R160 730 + 40% of the amount over R552 000

 

Tax threshold

 

Persons under 65 - R57 000

Persons over 65   - R88 528

 

Tax rebates

 

Persons under 65  -R10 260

Persons over 65    -R15 935

 

Interest exemption

 

Natural person who a residents get the following exemptions

Persons under 65 - R22 300

Persons over 65   - R32 000

 

For non-residents, person who have been out of the country for at least 183 days of the year and did not carry on business in South Africa through a permanent establishment get all their interest income exempt from tax.

 

Deductions

 

Employees or holders of office who derive remuneration are restricted in

deducting expenditure incurred which relates to employment to the

following:

• Deductions in respect of contributions to a pension fund or retirement annuity fund

• Legal expenses

• Wear and tear allowance

• Bad debts allowance

• Doubtful debts allowance

• Premiums paid in terms of an allowable insurance policy - to the extent that the policy covers the person against loss of income as a result of illness, injury, disability or unemployment, and - in respect of which all amounts payable in terms of the policy constitutes income as defined

• Home office expenses, subject to requirements

 

Pension fund deductions

 

The greater of 7.5% of retirement funding income or R1 750 excess contributions are not carried forward.

 

Arrear pension fund contribution up to a maximum of R1 800 per annum. Any excess may be carried forward.

 

Retirement annuity contributions

 

The greater of 15% of non-retirement income or R3 500 less any current pension fund contribution or R1 750, may be used as a deduction.

 

Medical expenses

 

Persons over 65 may claim all qualifying medical expenses including contributions to medical aids.

 

Persons under 65 may claim medical aid contribution up to the capped amount of R670 for the first two beneficiaries and R410 for each additional beneficiary. You may also claim qualifying expenses that exceed 7.5% of taxable income before this deduction.

 

Travel allowances

 

As from 1 March 2010, any person receiving a fixed travel allowance, must keep a log book of business kilometres travelled in order to claim a deduction. The deemed kilometres method will no longer be allowed.

 

In this method you would use actual allowable running expenses for the vehicle and divide it by total kilometres travelled. This amount will then be multiplies by the business kilometres travelled to get the allowable deduction

 

Fringe benefits

 

The following can be classified as fringe benefits and is taxable:

 

• Private use of company vehicles

• Medical aid contribution paid by the employer

• Holiday accommodation if the property is owned by the employer

• Long service awards, if the amount is over R5 000

• Private use of business cellphones and computers

• Low interest or interest free loans from employers

• Subsistence allowances

• Residential accommodation supplied by an employer

 

Donations tax

 

Payable at a rate of 20% on the value of any property disposed of gratuitously

by a South African resident (natural person, corporate entity or trust)

excluding donations exempt from the tax. The tax is payable within three

months of the donation taking effect.

 

Exempt donations include:

• Donations by natural persons up to R100 000 per annum after

1 March 2007 (2006 : R50 000)

• Donations by corporate entities not considered to be public companies up to R10 000 per annum

• Donations between spouses not separated

• Bona fide maintenance payments

• Donations to Public Benefit Organisations and qualifying traditional councils and communities

• Donations where the donee will not benefit until the death of the donor

• Donations made by companies which are recognised as public companies for tax purposes

• Donations cancelled within six months of the effective date

• Property disposed of under and in pursuance of any trust

• Donation of property or a right in property situated outside South Africa if acquired by the donor

- before becoming resident in South Africa for the first time, or

- by inheritance or donation from a non-resident

• Donations between companies forming part of the same group of companies

 

Married in community of Property

 

Persons who are married in community of property are taxed on half of their own and half of their spouses interest, dividend, rental, and capital gains income. Income earned from remuneration, such as salaries are only taxed in the taxpayers hands.

 

Foreign capital allowance

 

Individuals who are older than 18 and have a tax clearance from SARS, may invest up to R4 million abroad. Income earned from these investments may also stay abroad.