Louise Reyneke Properties

BUDGET SPEECH - TAX CHANGES AFFECTING PROPERTY

 

NEWSFLASH!

 

BUDGET SPEECH - TAX CHANGES AFFECTING PROPERTY

 

On 22 February 2012 the Minister of Finance Pravin Gordhan delivered the annual budget speech and made some notable changes to the tax payable regarding the property industry. 

 

As from 1 March 2012 the inclusion rate for capital gains tax will be increased as follows:

 

1. From 20% to 33.3% for individuals, resulting in the increase of the effective tax rate from 10% to 13.3% as a maximum effective rate for individuals;

2. From 50% to 66.6% for companies, resulting in the increase of the effective tax rate from 14% to 18.6%;

3. From 50% to 66.6% for trusts, resulting in the increase of the effective tax rate from 20% to 26.7%.

 

The above changes are illustrated in the below table:

 

TAX PAYER

INCLUSION RATE

STATUTORY RATE

EFFECTIVE TAX RATE

Individuals

33.3%

0 - 40%

0 – 13.3%

Companies

66.6%

28%

18.6%

Trusts

66.6%

40%

26.7%

 

On the other side of the coin there were changes made in regard to the exclusions for capital gains tax that apply to individuals, which are as follows:

 

1. The annual exclusion has been raised from R20,000.00 to R30,000.00;

2. The exclusive amount on death increased from R200,000.00 to R300,000.00;

 3. The primary residence exclusion has increased from 1,5 million to 2 million.

 

The other notable change was the increase in dividends tax from 10% to 15%, effective from 1 April 2012.  This will affect property owning companies and close corporations when selling their assets and distributing the proceeds to its shareholders/members.

 

Information Supplied by THE DYKES VAN HEERDEN GROUP.

DYKES VAN HEERDEN (CAPE) INC

Tel : 0861 110 210

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