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South African Accountants Give 2010 Budget Advice

by Lorys Charalambous, Tax-News.com, Cyprus

01 February 2010


The South African Institute of Chartered Accountants (SAICA) has provided its advice to the Finance Minister, Pravin Gordhan, for when he presents South Africa’s 2010 budget to parliament on February 17.

SAICA is urging Pravin Gordhan to go out of his way to do something for small business. In particular, it said that he needs to adjust small business corporations’ maximum marginal tax rate for inflation. It was explained that a small business corporation is taxed according to a separate tax table, whereby the maximum marginal tax rate of 28% begins at a taxable income of ZAR300 000 (USD39,400).

“That ZAR300 000 maximum has not been adjusted for inflation since the 2007 tax year, heightening the risk that the small business corporation tax benefits might lose their impact and be depleted,” SAICA continued. “An increase of 8% a year is therefore requested so that the maximum marginal tax rate for small business corporations should start at a minimum level of ZAR400 000 for the 2011 tax year. On the same basis, the qualifying gross income threshold should thus also be adjusted to ZAR19m.”

SAICA also pinpointed several areas of prospective relief for the individual taxpayer. Deductions available to taxpayers earning remuneration are currently limited to: contributions to pension and retirement annuity funds; legal expenses, wear-and-tear allowances, bad debts and doubtful debts; any premium paid on an income protection policy; and the deduction of home study costs.

SAICA suggested that deductions could now be extended to, such as, membership fees to professional bodies paid by salaried employees; continuous professional education expenditure incurred by employees and not refunded by employers; and professional indemnity insurance premiums paid by salaried employees such as medical doctors.

Overall, it proposed that the “upcoming national budget should facilitate and fund initiatives for government to access business skills to promote accountability, transparency and enhance service delivery across all levels of government.”


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