|2012 TAX RELATED BUDGET PROPOSALS
The following is a summary of the tax related budget proposals announced by the Minister of Finance on 22 February 2012.
The main tax proposals for 2012 include:
• Increase effective capital gains tax rates to 13.3% for individuals, 18.6% for companies and 26.7% for trusts from 1 March 2012.
• Dividends tax becomes effective from 1 April 2012 at a rate of 15 per cent.
• Conversion of remaining medical tax deductions to tax credits from March 2014.
• From March 2014 an employer’s contribution to retirement funds on behalf of an employee will be treated as a taxable fringe benefit in the hands of the employee. Individuals will from that date be allowed to deduct up to 22.5 per cent of the higher of taxable income or employment income for contributions to pension, provident and retirement annuity funds with a minimum annual deduction of R20 000 and an annual maximum of R250 000. For individuals at least 45 years of age the deductible amounts will be up to 27.5% with a minimum annual deduction of R20 000 and an annual maximum of R300 000.