Treasury to close net on tax loopholes | Fin24
 
  • Cadre Cover

    The ANC is planning to launch a funeral policy scheme for members and supporters.

  • VBS Collapse

    Ramaphosa has acknowledged South Africans' impatience to see justice done.

  • Fin24’s newsletter

    Sign up to receive Fin24's top news in your inbox every morning.

Loading...

Treasury to close net on tax loopholes

Aug 24 2016 19:56
Liesl Peyper

Cape Town - A number of tax loopholes are about to close if National Treasury gets its way with proposed changes to income tax legislation.

Briefing parliament’s two finance committees on Wednesday, National Treasury named a number of proposals to tax rates and the tax base, as previously announced by Finance Minister Pravin Gordhan.

The taxation laws amendment bill (TLAB) and the tax administration laws amendment bill (TALAB) contain changes to the tax base, the closing of tax loopholes, changes to tax administrative procedures and other technical and procedural changes to tax laws.

The draft legislation was published for comment on 8 July this year and special hearings will be conducted on 30 August and 14 September.

Personal income tax

National Treasury announced four personal income tax-related actions:

- measures to prevent tax avoidance through the use of trusts: this proposed amendment is to limit the avoidance of Estate Duty and Donations Tax through interest-free loans to a trust;

- measures to prevent taxpayers from disguising high salaries through the use of restricted shares or share-based incentive schemes to reflect as dividends instead of salaries: the proposed amendment is intended to stop abuse, as schemes are sometimes created to allow some employees to pay tax at a lower dividend tax rate of 15%, instead of the marginal tax rate of for example 41%;

- remove the exemption of pension fund benefits paid from local retirement funds for services rendered outside South Africa: SA residents who work outside of the country receive retirement benefits they earned while abroad free from tax, even though those payments are made from a local retirement fund; and

- increase the limit for tax exemption for bursaries: the amendment proposes that the limit in respect of remuneration for qualifying employees be raised from R250 000 to R400 000.

Sugar tax

Treasury also proposes that a sugar tax of 2.29c per gram of sugar (this is equal to 20% on 1 litre of soft drinks, such as Coca Cola) be implemented on 1 April 2017.

The closing date for comments was on 22 August and Treasury received 135 submissions from the public.

Read Fin24's top stories trending on Twitter:

national treasury  |  pravin gordhan  |  tax  |  taxpayers
NEXT ON FIN24X

 
 
 
 

Company Snapshot

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

What's your view on deep sea mining?

Previous results · Suggest a vote

Loading...