Let Trevor help you save, says Old Mutual

Old Mutual welcomes the tax concessions announced by Trevor Manuel during the delivery of the 2009 Budget speech in parliament today. Although South African taxpayers will be paying slightly higher excise duties o­n various items, the minister is also giving back a significant amount to taxpayers.

“Due to fiscal constraint in the good years we are now reaping the reward of an expansionary budget to help boost the economy during the tougher times ahead,” says Andrew Ruddle, Investment Product Actuary at Old Mutual.

A R13bn tax relief for individuals countering inflation and providing real growth in money in consumer’s pockets ensures that under 65 year olds earning R120 000 p.a. will be saving tax of R1476 p.a. People under 65 years of age that are earning R300 000 p.a. will be saving up to R3926 p.a.

Taxpayers are being given additional encouragement to save through increased tax exemptions. The annual tax-free portion o­n interest income for consumers younger than 65 will increase from R19000 to R21000. Over 65ers will be saving an additional R2500 with an overall tax-free interest income deduction of R30000. There is also an additional R300 tax saving o­n foreign interest and dividends, and capital gains tax relief with an increase from R16000 to R17500 in the annual exclusion.

People contributing to medical schemes will benefit from a monthly increase in their deductible contributions to R625 for the first two beneficiaries from R570 previously. For every additional beneficiary tax deductible contributions are increasing from R345 to R389.

“On the other handduties will be raised directly o­ncigarettes by anextra 88c per pack. For someone smoking a pack a day it will translate into an extra expense of up to R27.40 per month. Wine, spirit and malt beer lovers will also be dipping slightly deeper into their back pockets. Furthermore, the average driver going through two 50 litre tanks a month will pay an additional R40.50 in petrol bills or R29.50 in diesel bills,” says Ruddle.

The overall tax savings that the average taxpayer will enjoy can be used to pay off debt and to put aside extra savings as a buffer for the tougher times that the Minister signalled lie ahead. Ruddle concludes: “Together with recent regulatory changes affecting commission and early termination values o­n many savings products, the Minister has created a positive savings environment for the man o­n the street. The need for South Africans to save for their future has never been stronger, and this budget provides significant extra incentives for them to do so.”