Individuals, Employment and Savings

Refining the foreign employment income tax exemption for South African residents
From 1 March 2020, South African residents who spend more than 183 days in employment outside the country will be subject to South African taxation on any foreign employment income that exceeds R1 million. To prevent monthly withholding of income tax in South Africa and in the host country, the law will change to allow South African employers to reduce their monthly local pay-as-you-earn (PAYE) withholding by the amount of foreign taxes withheld on the employment income. Before implementation, there will be a workshop to consult taxpayers on their administrative concerns. The amendments will be during the 2019 legislative cycle.

Business (financial sector)

Study on the tax treatment of amounts received by portfolios of collective investment schemes
In 2018, there were initial draft amendments to the Taxation Laws Amendment Bill to tax the profits of some collective investment schemes as revenue instead of capital. However, after reviewing the public comments on this draft, government decided to take more time to work with industry to find solutions that will not negatively affect the relevant groups. This study is for the 2019 legislative cycle.

Refining Taxation of Risk Policy Funds

From 2016, there is a separate risk policy fund in addition to other policyholders’ funds such as the individual and company policyholders’ funds to tax long-term insurers. There is also the untaxed policyholders’ fund that is exempt from tax and that is for retirement funds and annuities. If a policy allocated to a risk policy fund is paying benefits in the form of an annuity, then the transfer of assets between that fund and the untaxed policyholder fund of the insurer creates an administrative burden. The legislation will change to address this.

Aligning Income Tax Provisions with the Insurance Act

The Insurance Act (2017), which came into effect during 2018, replaced provisions of the Long-term Insurance Act (1998) and the Short-term Insurance Act (1998). The definitions in the Income Tax Act will change in line with the new Insurance Act.

Medical Tax Credits

There has been no change in the amounts that individuals may deduct as a medical scheme fees tax credit when determining tax payable.

Donations Tax

The rate at which donations tax is levied, remains unchanged.

Donations to Public Benefit Organisations

Deductions in respect of donations to certain public benefit organisations remains the same at 10% of taxable income.

Withdrawal Benefits from Retirement Funds

The table applicable to withdrawal benefits from retirement funds remains unchanged.

Retirement Fund Lump Sum Benefits or Severance Benefits

The table applicable to retirement fund lump sum benefits or severance benefits remains unchanged.