Outstanding Budget items that could be included in 2012

Several outstanding items from previous Budgets that haven’t seen the light of day could be included in 2012. In the 2010 Budget speech, for example, there was a brief mention about the estate duty system and its cost to SARS in light of its limited be

“The thinking was that those skills could be better employed elsewhere,” says Mike Dingley, National Head of Taxation Services at global audit, tax and advisory firm Mazars.

At the time, the Minister planned to look at the current estate duty regime, possibly with a view to scrapping it. “If this happens the legislature might consider increasing the CGT inclusion on a taxpayer’s death from 25% to a higher percentage and collect the tax that way, on a normal assessment basis,” Dingley says.

Then, in last year’s Budget, there was a substantial mention about the tax treatment of retirement funds and withdrawals from provident funds. Treasury discussed treating all retirement products as one product and not differentiating between pension funds, provident funds and RAs. Instead, a new, combined deduction of the lower of 22.5% of taxable income or a maximum of R200, 000 was proposed, with a minimum annual deduction of R12,000. Since then, no further mention of this proposal has been made, nor has any legislation come to light.

Mention was also made last year of imposing a final 15% withholding tax on all gambling winnings about R20, 000, including winnings from the National Lottery. “Again, no further developments were made public during 2011.”

In terms of business taxes, debt relief was highlighted last year. Paragraph 12(5) of the 8^th Schedule to the Income Tax Act ordinarily treats a debtor whose debt has been forgiven as having derived a capital gain. Alternatively, the forgiven amount may constitute a taxable recoupment or be applied against assessed losses. The Minister said that Government would consider granting an exemption in the case of debt relief extended to insolvent companies.

Under the theme of skills development and job creation, A youth employment subsidy, in the form of a tax credit, was also mooted, to be administered by SARS through the PAYE system.

“It will be interesting to see which of these proposals are progressed this year, and which are relegated to the back burner for now.”