When Finance Minister Tito Mboweni delivered the 2020 budget speech on Wednesday, it was a welcome surprise that value-added tax wasn’t increased.
There were also no adjustments to personal income tax. Therefore, you will continue to pay the same amount of taxes, even if you received a raise. As a result, you may have more money to save or pay off your debt.
This is good news, but this isn't where the good news stops. Justmoney takes a look at three changes that will make your financial life easier.
Tip: Take control of your finances by using our budget calculator.
1. The Tax-free Savings Account (TFSA) contribution limit will increase
Your annual contribution limit to the TFSA will increase from R33,000 to R36,000. Putting money in a TFSA allows you to save money without paying tax. It’s also flexible and you can access your money whenever you need it.
“You can use this for your long-time savings and retirement goals,’’ says Ester Ochse, head product for money management at FNB.
Increasing the limit will allow you to save more towards your goals and you’ll have more untaxed income.
READ MORE: 10 Facts about tax-free savings accounts
2. The government is going to introduce compulsory third-party insurance
During his budget speech, the minister said that the liabilities of the Road Accident Fund (RAF) are predicted to exceed R600 billion by 2022/23.
In order to reduce the risk to the fiscus and bring about a more equitable way of sharing these costs, the government is considering introducing compulsory third-party insurance.
Mboweni didn’t mention when or how the insurance will be implemented. However, if implemented, this will come in handy for car owners as it will reduce their insurance premiums. More than a third of households have uninsured vehicles, and this risk is carried by those who have insurance and pay high premiums.
Third-party insurance covers the cost of injuries or damages caused to another party during a motor vehicle accident. The disadvantage is that if you don’t have this insurance, the other party will have to pay for the damages or injuries with their own insurance.
3. There’ll be no transfer duty for property that costs R1 million or less
The threshold for transfer duty is R900,000, but to support the property market, the Minister announced it’ll be adjusted to R1 million. So if you if you’re purchasing property that costs less than R1 million, you’ll not pay transfer duty.
“This will positively impact prospective buyers and help encourage home ownership in South Africa,” says Buyisile Maseko, growth head at FNB Home Finance.
“With the steady increase in property prices over the last 24 months, this is a welcome relief to individuals who want to enter the property market. The raised threshold for transfer duty is positive news as it provides some relief for first-time homeowners,” says Maseko.
The increase in the transfer duty threshold provides a very positive incentive not only for first-time home buyers but also others seeking affordable homes – a sector which represents a key driver in the current market, says Andrew Golding, chief executive officer at Pam Golding.
“It will help stimulate property transactions in this price band, increasing volumes and creating a ripple effect across the market in general – which will in turn benefit government income generation,” he adds.
If you’d like to see which savings accounts offer the best interest rates, click here.