Following the recent South African budget address given by Finance Minister Pravin Gordhan, it is clear that higher earners will be affected.
The new tax laws which come into effect on the 1st March 2017, see a 45% tax bracket introduced if you earn more than R 1,500 001. This will push up your personal income tax considerably. The last tax year you were paying 41% tax. Given the large sums the 4% will eat into your wealth management plans.
South African State Pension Increases
Another aspect of the budget that may alter your wealth management strategy is the increases in state pension. State old age grant increases to R1,505 to R1,600 per month, while the state old age grant for the over 75s rises from R1,525 to R1,620 per month.
Snapshot of the Budget
As expected, “sin taxes” saw considerable rises and so did fuel which is increasing by 30 cents per litre.
Here is a snapshot of how much extra you will be paying on alcohol and tobacco:
- Cigarettes 106c/packet of 20;
- Cigarette tobacco 119c/50g;
- Pipe tobacco 40c/25g; and
- Cigars 658c/23g.
- Beer 12c/340ml;
- Fortified wine 26c/750ml;
- Ciders and alcoholic fruit beverages 12c/340ml;
- Unfortified wine 23c/750ml;
- Sparkling wine 70c/750ml;
- Spirits 443c/750ml;
Protecting your Wealth in South Africa
With the introduction of the higher tier of tax it becomes even more important to manage your investments with more precision. As well as this a holistic approach is needed to look at the whole of your wealth, including your assets with the view of minimising your tax liabilities. Using the services of a credible financial planner, familiar with South African tax law will help with this task considerably.
The best way to approach issues generated by the tax bracket, is to go through your investment portfolio, your assets, and your incomes and see how tax liabilities can be minimised. My award winning financial advice will help you take back control and reduce your tax payments to the South African government.