What’s changing and staying the same for the 2023/24 Tax Year

With the Budget Speech wrapped and the new fiscal year in full swing – we caught up with the Director of Product Compliance at Sage Africa & Middle East Yolandi Esterhuizen, who is also a registered tax practitioner – to find out everything tax-related that was mentioned in the 2023 Budget Speech.

As a new fiscal year kicks off, one of the main things on the agenda for every business is – what adjustments need to be made for any budget speech or legislative changes? We caught up with Yolandi Esterhuizen, the Director of Product Compliance at Sage Africa & Middle East and a Registered Tax Practitioner, to get an in-depth look at everything tax-related that got mentioned during the National Budget Speech for 2023/24.

While some changes are being made to tax collections and income tax, there aren’t any major jumps or changes taking place – given the focus primarily falling on our country’s ongoing energy crisis.

Here’s all that Esterhuizen had to share about the tax changes that you need to be aware of when entering the new fiscal business year:

What’s changing?

1Tax collections – The South African Revenue Service (SARS) is expected to collect R1.69 trillion in gross tax revenue for the current tax year – which is more than what was estimated. Esterhuizen explains that this expectation has created the space for the government to strengthen the social wage bill, increase infrastructure investment, narrow the budget deficit, and address fiscal and economic risks without major tax hikes. 

2A broadened personal income tax base – It’s no secret that personal income tax makes up the largest contribution toward government revenue. And, with the changes in how and where people work caused by the Covid-19 pandemic, SARS and the National Treasury (NT) have announced that they are conducting a multiyear review to understand the current workplace practices. Esterhuizen adds that they’ll be looking at how the changes in the workplace environment are affected by home offices and travel allowance policies. 

3Tax breaks for renewable investments – The finance minister announced a scheme that will allow businesses to reduce their taxable income by 125% of the cost of an investment in renewables this tax year. Esterhuizen explains that this will offer a tax break for businesses that invest in renewables as well as for individuals who install solar panels from 1 March 2023 to 29 February 2024. They’ll be able to claim a rebate of 25% for solar panels – which extends up to a maximum of R15,000. However, this may depend on the uptake and the power situation over the next year. “It would not be surprising to see these rebates extended in the minister’s next budget,” adds Esterhuizen.

4Income tax adjusted for bracket creep – Taxpayers can revel in the news that income tax rates have been adjusted lower to cater for inflation – which means taxpayers can expect to pay less in ZAR. The annual tax-free threshold for a person under 65 has increased to R95,750 – meaning that a person under 65 who earns R500,000 annually can expect to pay about R3,000 less in income tax for the year. This news, Esterhuizen adds, should help to offer low- and mid-income earners some relief and protection from the impact of inflation.

5Medical tax credits – Esterhuizen explains that the Budget Speech included a much-needed inflationary increase in medical tax credits to R364 per month for the first two members on a plan and R246 per month for additional members. The finance minister could not speak to the National Health Insurance (NHI) and how it will be funded, but Esterhuizen predicts that progress can be expected to remain slow until economic conditions improve. 

6Tax administration burdens to be reduced – SARS is looking to enhance the collection of third-party data and employee data from employers on a monthly basis. This will ideally allow SARS to cease the need for the annual and bi-annual EMP501 returns. 

 What’s not changing?

1Fuel levies on hold – Esterhuizen shared that the finance minister once again has decided not to increase fuel and the Road Accident Fund (RAF) levies. This offers relief and good news to businesses that rely on diesel expenses for operating generators during load shedding. Food manufacturers also stand to benefit, Esterhuizen explains, as they can claim a refund on the RAF levy, when they pay for diesel used during the manufacturing process. The regulations have not yet been gazetted and SARS is expected to audit logbooks to track diesel that’s used for manufacturing and not transport.  

2Two-pot retirement system slows – The NT proposed an exciting two-pot retirement savings system that would allow members to split their retirement savings into two pots – an accessible pot carrying a third of their contribution investments and an inaccessible pot holding the remaining two-thirds. The hope is that members have access to funds in financial emergencies, while still maintaining savings toward their retirement. However, Esterhuizen shares, the draft legislation that was initially intended to be implemented in the 2023/24 fiscal year of assessment was moved to the 2024/25 year of assessment. This is due to the minister mentioning that NT is re-evaluating the draft legislation at present. 

While the above announcements were made during the Budget Speech, it is important to remember that these are merely forecasts and expectations as legislation and tax laws are constantly being regulated and updated as the year continues. To help you stay on the pulse with the updates and in the loop – keep in regular contact with your business accountant or the payroll professionals available from Sage.

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