Carbon Tax

Carbon tax became effective from 1 June 2019. The tax is being implemented in a phased manner, taking into account SA’s NDC commitments to reduce greenhouse gas emissions. The first phase will be from 1 June 2019 to 31 December 2025, and the second phase from 2026 to 2030. This ensures alignment with our NDC commitments under the Paris Agreement.

Crypto Assets

Crypto assets are regarded as a financial instruments for Income Tax purposes and not as a currency. As such the profit or loss on crypto asset trading could either be taxed as normal income if the intention of the investor was to speculate or alternatively the profit or loss could be regarded as a capital gain or loss if the intention of the investor was to hold it long-term as a capital investment.

Deductions

Contributions to pension, provident and retirement annuity funds

Dividends Tax

Dividends tax is a tax levied on the shareholder at a rate of 20% on dividends paid. However, where a dividend in specie is paid, dividends tax is a tax levied on the company declaring the dividend. Dividends tax is normally withheld by the company paying the dividend and is payable at the end of the month following the month in which the dividend was paid. The repayment of contributed tax capital by a company would be regarded as a return of capital and not subject to dividends tax.

Donations Tax

Donations Tax is payable by any South African resident. The donations tax provisions do not apply to non-residents even if they donate South African assets. Donations tax is payable on the value of any gratuitous disposal of property (including the disposal of property for inadequate consideration) and the renunciation of rights.

Employment Tax Incentive

The employment tax incentive was instituted in order to encourage employment creation for the youth (i.e. employees between the ages of 18 and 29 years) and the incentive will come to an end on 28 February 2029.

Estate Duty

The general rule is that if the taxpayer is ordinarily resident in the Republic at the time of death, all of his assets (including deemed property), wherever they are situated, will be included in the gross value of his estate for the determination of duty payable thereon. Estate duty is levied at 20% on the first R30 million of the dutiable estate. Estate duty will be levied at 25% on the dutiable estate in excess of R30 million.

Exchange Control: Non-Residents

Non-residents may invest in the Republic, provided that suitable documentary evidence is received in order to ensure that such transactions are concluded at arm’s length, at fair market-related prices, and are financed in an approved manner.

Farming Tax

The First schedule of the Income Tax Act regulates farming taxes. The most important sections are:

Learnership Allowances

An annual and completion allowance of R40 000 may be claimed by the taxpayer for learnerships NQF qualifications from levels 1 to 6, and R20 000 for learnerships NQF qualifications from levels 7 to 10. The deduction claimable for disabled learners is R60 000 or R50 000 for both annual and completion allowances.