Overall
“Trusts continue to be hammered in respect of Capital Gains Tax which does not bode well for wealth creation.” – David Nathan, senior partner Grant Thornton
“We were disappointed that dividend tax has effectively been increased by 50% (from 10% to 15%). STC used to be payable by companies at 10% of the dividend whereas now the shareholder pays and the rate will be 15%.”- David Nathan, senior partner Grant Thornton
“The Minister said we should turn our country into a true gateway for investment and development into Africa. However we’re disappointed that he has done nothing to abolish or even to mitigate the wasteful and unnecessary bureaucratic system of exchange controls.” Leonard Brehm, national chairman of Grant Thornton SA
“The Minister said the government is committed to an environment that will encourage business investment. Why then did he put the CGT rate up by one third and the dividend tax rate by 50%? This simply punishes investors.” Leonard Brehm, national chairman of Grant Thornton SA.
“We’re disappointed that nothing further has been mentioned about the abolition of Estate Duty which was alluded to several years ago. Estate Duty coupled with a higher Capital Gains Tax is detrimental to many people who have managed to accumulate wealth in their lifetime. ” David Nathan, senior partner Grant Thornton Johannesburg.
On the increase to the dividend tax
“Certain listed companies have announced a delay in declaring their dividends pending the introduction of the new dividend tax system, but they now need to make other provisions. Following the changes in the dividend tax rules announced today, it will provide companies with an incentive to declare dividends before 1 April.” Neville Sweidan, Partner Grant Thornton
SMME support
“Regarding small, micro and medium sized enterprises, it is encouraging that there is some tax relief given to small, micro and medium enterprises. The reduction in the administrative burden is also welcomed.” Cliff Watson, executive tax manager, Grant Thornton
Gauteng tolls
“The special appropriation of R5,8 billion towards the debt related to the project, is encouraging. The idea of the halving and capping of these fees is welcomed. However, it should be taken into account that a person with an e-Tag would need to travel approximately 1833 km per month, or 46 km per day one way on the toll road to reach the cap of R550 per month. In addition to this, individuals would spend an average of R51,24 per month following the increases in the fuel levy and Road Accident Fund.” Cliff Watson, exeutive tax manager Grant Thornton Johannesburg
Indirect taxes
“The special economic zones are welcomed – it could create a possible reduction in headline corporate tax rate for businesses within the selected zones.” Wian de Bruyn, Associate Director, Grant Thornton Johannesburg
NHI
“It is worrying that the taxpayer is still in the dark as to how NHI is going to be funded.” Barry Visser, Senior tax manager, Grant Thornton, Johannesburg
Raod Accident Fund
“In light of capping of Road Accident Fund benefits, the increase in the Road Accident Fund levy is difficult to understand, unless there are more serious problems in the RAF that have been publicised.” Neville Sweidan, Partner, Grant Thornton
Customs
“It is encouraging that there will be a continued focus by customs on import consignments to review the value of imported goods.” Wain de Bruyn, Associate Director, Grant Thornton
Carbon tax
“It seems likely that the government will be moving in the direction of a draft policy paper some time this year.” Wian de Bruyn, Associate Director, Grant Thornton Johannesburg
VAT
“The VAT exemption for bargaining councils and political parties’ income is encouraging, as the move is to be in line with other similar exemptions. There are proposals to alleviate double vat charge on certain supplies or importation of goods.” Cliff Watson, executive tax manager
Capital Gains Tax
While the relief is encouraging regarding the exclusions for primary homes, the CGT inclusion rates have increased and individuals will pay 3,3% more while companies’ contribution will increase by 4,6%.” Barry Visser, Senior Tax manager Grant Thornton
On infrastructure, support and development
“We agree with the Minister where he emphasises that business should invest in our future – he alluded to 43 planned public infrastructure projects of which transportation and logistics, social infrastructure and energy were the main focus areas. Yet he provided no clarity or role for the Private Sector or on PPPs in general.” Christelle Grohmann, director Grant Thornton Advisory Services.
“To further invest in the EDZs (economic development zones) in order to use them as a mechanism for infrastructure growth would require more specific detail,. It makes it hard to entice big investors into these zones without detailed information specifically relating to the ROIs and overall worth.” Christelle Grohmann, director, Grant Thornton Advisory Services.
On Tourism
“We are very disappointed with the lack of mention of budget allocations for the Tourism sector other than a brief mention with no data on SANParks. This is disappointing given expenditure and investments in 2010 – it indicates a serious lack of continuity.” Lee-Ann Bac, director Grant Thornton Advisory Services.
“The detailed budget estimates show an encouraging increase from R52 million to R70 million – however, this is less than $10-million and paltry compared to our biggest tourism competitor (Australia) that has an annual budget of $170 million.” Lee-Ann Bac, director Grant Thornton Advisory Services.
On housing
“It is encouraging that Treasury is putting a focus on housing with tax-break options for developers. In addition, the recognition that housing finance institutions and low income earners require additional financial and other support is laudable. We would hope that the mortgage support facility comes to fruition.” Lee-Ann Bac, director Grant Thornton.
On impacting M&A transactions
“An increase in capital gains tax for individuals and trusts could result in a slight decline in transactions in the short term, as sellers’ after-tax receipts will be lower than expected. This combined with possible targeting of leveraged transactions, (continuing the theme from last year’s disastrous suspension of Section 45), could scupper a number of M&A transactions, particularly in the Private Equity and BEE space.” Steven Kilfoil, director Grant Thornton Corporate Finance.
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