Budget Speech 2018: What You Need To Know

A Wealthsmith knows the importance of running a successful budget – one that considers all incomes and expenses – whether it’s for a househould, a business or the South African economy. We tuned in for the 2018 Budget Speech to bring you all the highlights and to help you prepare for the year ahead.

VAT increase
For the first time since 1993, South Africa’s value-added tax (VAT) has been raised – by one percentage point to 15% from 1 April 2018. This change will play a pivotal role in generating an additional R36-billion for the national purse. The government trusts that 80% of the effect of the hike in the VAT rate will be carried by higher income earners. You can expect to see a further rise in the prices of consumers goods.

Income tax
There was no relief for taxpayers, with the top four tax brackets remaining unchanged. If you want to see the impact of tax on your income, use our handy tax calculator. It will calculate your annual and monthly income tax deductions according to your age and monthly salary.

Medical tax credits
The budget also cut back on medical aid related tax breaks, with below inflation increases in medical tax credits. Therefore, if you have a private medical aid, you will be paying more for it in 2018. Money saved here will be put towards funding the National Health Insurance project which hopes to kick off this year.

Estate duty
Another new tax proposal is the higher estate duty tax rate of 25% for estates greater than R30 million – a hefty amount if you’re part of the super-rich.

Fuel tax
Motorists will now get fewer kilometres for the same cost, as fuel levies are rising by 52 cents per litre, made up of a 22 cents per litre for the general fuel levy and a 30 cents per litre increase in the Road Accident Fund Levy from 4 April 2018. Now more than ever, it will pay to invest in a more fuel-efficient vehicle or to see where you can cut down on or share commuting costs.

Sources:
https://www.fin24.com/Budget/budget-in-a-nutshell-new-hope-amid-vat-and-other-tax-hikes-20180221 
http://ewn.co.za/2018/02/21/budget2018-everything-you-need-to-know 
https://citizen.co.za/news/south-africa/1829073/live-report-budget-speech-2018/ 
https://www.fin24.com/Budget/sugary-drinks-tax-a-go-plastic-bag-levy-up-20180221 
https://www.fin24.com/Budget/yes-sin-taxes-are-going-up-again-20180221

Read The full article here: https://www.sanlam.co.za/blog/articles/Pages/budgeting-2018.aspx 

March 12 2018 By Sanlam.co.za Financial Planning, Investing & Markets