![\"Taxation](\"http:\/\/www.thebizsense.com\/za\/files\/2011\/11\/SARS-forms.590.jpg\" "\\"Taxation")
<\/a>Taxation Amendments<\/p><\/div>\n
Pretoria – Adjustments to the country\u2019s taxation bills currently before Parliament aim to help grow the South African economy, and will alleviate the burden on ordinary working citizens, says Finance Minister Pravin Gordhan.<\/p>\n
Speaking at the debate on National Treasury\u2019s Taxation Laws Amendment Bills, 2011\u00a0 in Parliament, Gordhan defined the Bills as being a balanced package.<\/p>\n
\u201cThese Bills contain many fiscal measures that seek to facilitate growth by alleviating the burden on ordinary working citizens and by removing tax blockages that impede legitimate commercial goals.<\/p>\n
\u201cThese Bills also take aim at aggressive tax practices, such as the (mis)use of section 45, that seek to shift large amounts of revenues indirectly from the fiscus for the benefit of a few members of the corporate elite,\u201d he explained.<\/p>\n
Among the features of the Bills is the provision of R8.1 million in personal income tax relief for the benefit of ordinary people. As part of this package most people can now earn R59 750 a year tax-free while elderly people aged 65 to 74 can receive R93 150 tax-free. Those who are 75 and above can receive R104 261 tax-free.<\/p>\n
\u201cAll brackets will be shifted upwards with the top marginal rate of 40 percent applying only to those persons earning over R580 000.\u201d<\/p>\n
The Bills also include changes to medical credits \u2013 currently the provision of tax deductions for medical aid scheme contributions undermines tax fairness with rich taxpayers receiving more relief than lower income taxpayers.<\/p>\n
\u201cIn order to remedy this situation, instead of providing deductions, the revised system offers credits,\u201d said Gordhan. The credits provide 30 cents relief to the rand regardless of a person\u2019s income level.<\/p>\n
\u201cOn Section 45 of the Income Tax Act, which was suspended with immediate effect in June for an 18-month period, the minister said this section would be \u201cretained but tightly controlled\u201d.<\/p>\n
In August, the minister said the suspension would be lifted and proposed a new short term solution for businesses that use the section.<\/p>\n
Section 45 allows the transfer of assets within a group of companies tax-free. The section gives companies roll-over relief and facilitated transfers among companies that operate as a single group.<\/p>\n
\u201cHistory now indicates that Section 45 has become a core acquisition tool in the case of leveraged buyouts of target companies.\u00a0 While we as government are not opposed to leveraged buyouts per se, at issue is the excessive debt often associated with these transactions.\u201d<\/p>\n
The excessive deductions, he said, come at an unacceptably high price to the fiscus.<\/p>\n
\u201cUnder the final proposal, section 45 will be retained but tightly controlled. More specifically, taxpayers will need to obtain SARS [South African Revenue Service] pre-approval before obtaining interest deductions associated with section 45.\u201d<\/p>\n
Treasury said tax leakages caused by this section and other sophisticated forms of financial engineering \u201care no small matter for our citizens at large.\u201d<\/p>\n
\u201cThe consequence of these revenue losses ultimately means that Government cannot pay its debts as they become due.\u201d – BuaNews<\/p>\n","protected":false},"excerpt":{"rendered":"
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