Guiding consumers since 2009

Education and tax budget - what does this mean for consumers

By Staff Writer

Efforts to improve the quality of, and access to, education:

As job creation is Government’s number one priority for 2011, spending on education is likely to be a focus point in the years to come. And, while R8,2 billion has been allocated to improve school facilities over the next three years, Government is adamant that it cannot do it alone and that business, parents, communities and learners will have to play their part.

Personal tax issues:

- When it comes to issues of personal tax, there is a reduced burden on lower income groups as indicated by:

- Increases to the minimum tax threshold to R59 750 for taxpayers below age 65; and R93 150 for taxpayers aged 65 years and older.

- A proposed tax threshold increase for taxpayers aged 75 and older.

- An increase in the annual tax-free interest income to R22 800 for individuals below 65 years; and R33 000 for individuals aged 65 years and older.

What does this mean for the consumer?

The changes to personal income tax are basically adjustments for inflation. Commentators often refer to this as “bracket creep”.  What this means is that you pay a different tax rate on different parts of your income.  So on the first R150 000 you earn during the year you will pay 18% tax; on the next R85 000 (this is R150 001 to R235 000) you will pay a higher rate of 25% and so forth. Bracket creep means that when you get your increase during the year you might be paying more tax on that extra bit of income. However Muller says that if we earn more to combat the effect of inflation, it does not help if this extra income disappears due to tax. As such, the Minister has adjusted the brackets to allow for inflation. Similarly the tax threshold has been increased from R57 000 to R59 750 for taxpayers younger than 65. When it comes to the interest exemption, it means that you do not pay tax on the first amount of interest you earn. So if you are younger than 65, you will only pay tax on interest if you receive more than R22 800 a year. If you are between 65 and 75 you will only pay tax if you receive more than R33 000 of interest a year.

Recent Articles

Featured 6 smart ways to select the best medical scheme

It’s important to belong to a medical scheme that offers great benefits at affordable prices. However, due to insufficient knowledge, many people find themselves paying higher premiums for a medical scheme which does not even meet their needs.

Calculate your vehicle finance instalments

You’ve dreamed of a set of wheels since you can remember, and now that you’re a responsible adult with a steady income, you’re ready to take on funding to make this dream a reality. But what kind of vehicle finance options are available to you? Justmoney gives you the rundown.

Check the interest before you take a loan

Justmoney takes a look at what influences the interest rate on a personal loan, the difference between secured and unsecured loans, and its impact on the interest rate.

One retirement, so many funds – pick the right one

Saving for retirement should be one of your priorities. However, it can be confusing to choose between a pension fund, provident fund, preservation fund, or a retirement annuity if you’re not familiar with them.

Deals

Wimpy Cheese Griller Brekkie Special

Price: R49.90
When: Until 9 September
Where: Nationwide

Mowana Spa Me Time Indulge Special

Price: R899
When: Until 31 August
Where: Fourways

Premier Hotels Weekend Getaway Special

Price: From R540
When: From 1 September
Where: Nationwide