24 Oct Tax increases on the cards?
Tax increases on the cards?
With South Africa’s tax revenue collection missing targets for the 2017 year of assessment, the government will look to new sources of income to reign in the current budget deficit. Taxpayers and the general public at large have heard rumours of, and will await word or guidance on two issues in particular:
Medical Tax Credits
If a taxpayer pays for their own medical aid and that of their dependents, they enjoy a monthly medical tax credit to the value of:
• R303 per month for the medical aid member
• R303 per month for the first dependent
• R204 per month for each additional dependent
For a family of 4 this amounts to a tax credit of R1014.00 per month and over R12000 of tax saved per annum. The government plans to scrap the medical tax credits to help fund the National Health Insurance initiative.
VAT on Fuel
Fuels are currently zero-rated for VAT purposes. Meaning that VAT is levied at 0% on these items – similar to basic foods such as bread, milk and vegetables.
The government may increase the VAT rate on fuels to 14% and economists estimate that this should raise an additional R30 Billion to R40 Billion in revenue for the government.