CAPE TOWN - South African's were told to expect less than inflation adjustments and that's just what they got. Government is using "bracket creep" to help cover the deficit meaning taxes increased if you adjust for inflation. You'll have less money in real terms every month.
Looking at Table 1, the biggest gainers are, as Minister Gordhan says, the lower brackets. Even they don't get the full benefit of inflation, which was around 9% in 2010. The highest relief is for income up to the R132 000 per year mark.
Table 1: Personal income tax brackets and the percentage adjustment for the new year.
You will now get your lowest bracket ratcheted up by just over 6%, meaning on income up to R140 000 per year you will pay R25 200 in tax. This is from R23 760 on R132 000 in the 2009/10 tax year.
Not only that, but the rebate taken off your tax payable has been increased just over 5%, from R9 756 to R10 260. This means that if your income doesn't increase from the R132 000 mark, you will be paying 3.6% less tax or R504 extra in your pocket per year.
These changes in personal income tax brackets will put R6.5bn back in citizens' pockets.
Figure 1: changes in tax burden for different levels of taxable income.
|Brackets 2010/11||2009/10||2010/11||% Change|
|18% rate||R 132,000||R 140,000||6.06%|
|R25 200 + 25% of income over R140 000||R 210,000||R 221,000||5.24%|
|R45 450 + 30% of income over R221 000||R 290,000||R 305,000||5.17%|
|R70 650 + 35% of income over R305 000||R 410,000||R 431,000||5.12%|
|R114 750 + 38% of income over R431 000||R 525,000||R 552,000||5.14%|
|R160 730 + 40% of income over R552 000||R 525,001||R 552,001||5.14%|
|Primary||R 9,756||R 10,260||5.17%|
|Secondary||R 5,400||R 5,675||5.09%|
|Below 65yrs old||R 54,200||R 57,000||5.17%|
|Over 65yrs old||R 84,200||R 88,528||5.14%|