IMPORTANT DATES

Please take note of the following important dates:

• EMP501 Reconciliation                            31 May 2023
• WCA/COIDA/RMA                                    31 May 2023
• FSCA Audit Reports                                 30 June 2023
• EAAB Estate Agent Report                      30 June 2023

We are a group of professionals and specialise in accounting solutions and tax planning. Please contact us to help you achieve your financial goals.

Contact us for more information.

• Call us on 012 807 1714
• Email us at [email protected]
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  or visit our website: www.fcfin.co.za

Kind regards,
The FC CA team

This letter will summarise some of the important information that was provided in the 2023 budget speech by the Minister of Finance, Enoch Godongwana, on 22 February 2023.

The government is taking urgent steps to reduce load shedding and support smaller businesses to continue with operations.

Incentives has also been amended to assist individuals and organisations with the capital outlay of alternatives to energy provided by Eskom. Savings incentives has also been amended to assist taxpayers in the short term and focus on recovering in the long term.

Annual exemption for individuals

The annual exclusion for local interest for individuals has remained unchanged:

• Individuals younger than 65  –  R 23 800
• Individuals 65 years and older  –  R 34 500

The annual exclusion on capital gain has also remained at R 40 000 per year,
however, capital losses may still be carried forward.

Casual donations made by an individual to the value of R 10 000 per year will remain tax-free for the donor.

Donations to approved public benefit organisation may be claimed as a deduction up to a maximum of 10% of the donor’s taxable income. If the full donation amount exceeds the allowable deduction amount for that year, the difference may be carried forward and claimed in the next year.

A compromise on there being no increase in the capital gain or local interest exemption, an individual may contribute R 36 000 per year or R 500 000 in a lifetime into a tax-free saving account.

Retirement fund contributions and withdrawals

The tax tables for retirement withdrawals have been adjusted upwards with 10%. The maximum tax-free withdrawal in one lifetime has therefor increased to R 550 000.

Government intends to implement revised legislation on the withdrawal of retirement funds. A ”two pot” retirement system will be implemented from 1 March 2024 for contributions made after this date. This will be for early access to a portion of retirement savings. 1/3 of the contributions will be taken to the savings pot from which the early withdrawal can be made. Early withdrawals will be taxed according to the applicable tax rates. Withdrawals will be allowed only once a year and a minimum withdrawal amount of R 2 000 will be applicable.

The uniform treatment across all three types of retirement funds will be applicable.

Solar panel tax incentive for individuals

This tax incentive is part of the government’s strategy for individuals to be less depended on energy provided by Eskom. The tax rebate is also only applicable for the 2024 year of assessment.

25% of the cost of the solar panels may be claimed as a rebate against personal income tax. The rebate is limited to R 15 000 for the year.

The following requirements will have to be met before the rebate can be claimed:

•  New and unused solar panels should be brought into use between 1 March 2023 and 28 February 2024
• Minimum capacity of 275watt per panel
• Residence should mainly be used by the individual for domestic purposes
•  COC electrical instillation regulations apply
• VAT invoice should disclose the purchase/cost of the PV Panels separately
• Proof of payment should be readily available

The following costs do not qualify for the rebate:

•  Installation costs
•  Inverters
•  Batteries
•  Generators

Business incentive for renewable energy

The usual wear and tear allowances on solar equipment for businesses are as follows:

• 50%,30%, and 20% deduction in the 1st,2nd and 3rd year if the solar generation is above 1 megawatt (MW)
• 100% deduction in the 1st year if the solar generation is below 1 MW

However, the new incentive provides that 125% of the cost may be expensed in the 1st year, if the installation of the solar equipment is between 1 March 2023 and 28 February 2025. This incentive is irrespective of the generation capacity.

The cost includes any machinery, plant, implement, utensil or article that is required for the power generation.

The following requirements will be applicable:

• The solar generation assets need to be used to generate electricity for the business to carry on normal trade.
• The solar power generation assets need to be brought into use for the first time between 1 March 2023 and 28 February 2025.

Other rates

The following has remained unchanged:

• Local dividend tax 20%
• Donations tax 20%
• Foreign dividend exemption 25/45

Generally, South African-sourced interest and royalties earned by foreign entities outside of the country will be subject to a 15% withholding tax.

Properties below the value of R 1.1 million will also now not attract transfer duty.

Non-taxable reimbursement for actual travel will be R 4.64 per kilometer.

The 2023/2024 tax rates for individuals have been adjusted for expected inflation of 4.9%