4.  Pravin Gordhan quotes:  “We at SARS should try to be creative and to demonstrate goodwill. But out there, you will always have those who are being deliberately evasive. And honest taxpayers will want us to create a level playing field.”  This is probably due to companies paying out lower bonuses and lower than estimated wage increases.”

5.  Main tax proposals:  Personal income tax relief of R8.1billion  3 rd rebate for individuals >75 years  Conversion of medical tax deduction to tax credits  Transfer duty relief  Higher taxes on fuel  Higher taxes on alcohol and tobacco  Taxation of gambling winnings.

6. Where does tax revenue come from?

7. R million Personal income tax (PIT) Corporate income tax (CIT) Secondary tax on companies (STC) Value Added Tax (VAT) Fuel levyCustoms duties 1 Specific excise duties Other 2 Total tax revenue 2004/05 110 98270 7827 48798 15819 19012 88813 06722 425354 979 2005/06 125 64586 16112 278114 35220 50718 30314 54725 404417 196 2006/07 140 578118 99915 291134 46321 84523 69716 36924 307495 549 2007/08 168 774140 12020 585150 44323 74126 47018 21824 463572 815 2008/09 195 115165 37820 018154 34324 88422 75120 18522 427625 100 2009/10 205 145134 88315 468147 94128 83319 57721 28925 569598 705 Percentage of total 2004/05 31.3%19.9%2.1%27.7%5.4%3.6%3.7%6.3%100.0% 2005/06 30.1%20.7%2.9%27.4%4.9%4.4%3.5%6.1%100.0% 2006/07 28.4%24.0%3.1%27.1%4.4%4.8%3.3%4.9%100.0% 2007/08 29.5%24.5%3.6%26.3%4.1%4.6%3.2%4.3%100.0% 2008/09 31.2%26.5%3.2%24.7%4.0%3.6%3.2%3.6%100.0% 2009/10 34.3%22.5%2.6%24.7%4.8%3.3%3.6%4.3%100.0% Nominal percentage increase from 2004/05 to 2009/10 Cumulative 84.8%90.6%106.6%50.7%50.2%51.9%62.9%14.0%68.7% Per year 13.1%13.8%15.6%8.6%8.5%8.7%10.3%2.7%11.0% Percentage of GDP 2004/05 7.7%4.9%0.5%6.8%1.3%0.9% 1.5%24.5% 2005/06 7.8%5.3%0.8%7.1%1.3%1.1%0.9%1.6%25.9% 2006/07 7.7%6.5%0.8%7.3%1.2%1.3%0.9%1.3%27.0% 2007/08 8.1%6.7%1.0%7.2%1.1%1.3%0.9%1.2%27.6% 2008/09 8.4%7.2%0.9%6.7%1.1%1.0%0.9%1.0%27.0% 2009/10 8.4%5.5%0.6%6.1%1.2%0.8%0.9%1.0%24.5%

8. Number Individuals 1 Companies (CIT) 1 Trusts 1 PAYE 1 VAT 1 SDL 2 UIF 2 2004/05 4 115 293 933 136318 967302 880578 138N/A 2005/06 4 476 261 1 054 969344 882330 194633 703N/A 2006/07 4 764 105 1 218 905374 411349 077677 153168 933379 646 2007/08 5 204 805 1 584 002384 747379 675745 487168 646380 218 2008/09 5 540 646 1 834 009392 260393 974737 885168 997390 388 2009/10 5 920 612 1 878 856331 954395 575685 523174 165392 398 Percentage year-on-year growth 2004/05 9.0%14.2%12.4%10.2%7.8% 2005/06 8.8%13.1%8.1%9.0%9.6% 2006/07 6.4%15.5%8.6%5.7%6.9% 2007/08 9.3%30.0%2.8%8.8%10.1%-0.2%0.2% 2008/09 6.5%15.8%2.0%3.8%-1.0%0.2%2.7% 2009/10 6.9%2.4%-15.4%0.4%-7.1%3.1%0.5%

9. Personal income tax

10.  Personal tax relief:  50% to taxpayers with an income < R270 000 p.a.  33% to taxpayers between R 270 000 – R 580 000  12% to taxpayers between R 580 000 – R 1 000 000  5% to accounting officers  Otherwise known as taxpayers above one million rand taxable income

11.  Tax brackets  0 – 150 00018%  150 001 – 235 000R 27 000 + 25%  235 001 – 325 000R 48 250 + 30%  325 001 – 455 000R 75 250 + 35%  455 001 – 580 000R120 750 + 38%  >580 001R168 250 + 40%

12.  Rebates: ◦ PrimaryR 10 755 ◦ SecondaryR 6 012 ◦ Third rebateR 2 000  Tax Thresholds: ◦ <65R 59 750 ◦ >65R 93 150 ◦ >75R104 261

13.  Tax savings: ◦ Younger than 65 ◦ R 120 000 p.a.R 495 ◦ R 200 000 p.a.R 1 195 ◦ R 300 000 p.a.R 1 895 ◦ R 400 000 p.a.R 2 895 ◦ R 500 000 p.a.R 3 615 ◦ R 750 000 p.a.R 4 175

14.  Tax savings: ◦ Older than 65 and younger than 75 ◦ R 90 000 p.a.R 265 ◦ R 120 000 p.a.R 832 ◦ R 200 000 p.a.R 1 532 ◦ R 300 000 p.a.R 2 232 ◦ R 400 000 p.a.R 3 232 ◦ R 500 000 p.a.R 3 952 ◦ R 750 000 p.a.R 4 512

15.  Tax savings: ◦ Older than 75 ◦ R 100 000 p.a.R 2 065 ◦ R 120 000 p.a.R 2 832 ◦ R 150 000 p.a.R 3 532 ◦ R 250 000 p.a.R 4 232 ◦ R 400 000 p.a.R 5 232 ◦ R 500 000 p.a.R 5 952 ◦ R 750 000 p.a.R 6 512

16.  Savings ◦ Interest exemptions: ◦ Below 65R 22 800(2011 R 22 300) ◦ Over 65R 33 000(2011 R 32 000) ◦ Foreign R 3 700

17.  Savings ◦ Incentivised savings schemes:  Housing (1 st time buyers)  Higher education

18.  Retirement  2011/12 ◦ Pension funds: ◦ Greater of 7.5% from RFI or R1 750 ◦ Arrear contributions – R 1 800 ◦ Retirement annuity ◦ Greater of.. ◦ 15% of non-RFI ◦ R 1750 ◦ R3 500 less current pension fund deductions ◦ Broaden list of service providers to include: ◦ National Treasury’s retail savings bond scheme ◦ Collective investment schemes

19.  Retirement “For every benefit you receive a tax is levied” Ralph Waldo Emerson 1803-1882

20.  Retirement  2012/13 ◦ Pension funds ◦ Employer’s contribution – taxable fringe benefit ◦ 22.5% of taxable income deductible (RA, Pension and provident funds) ◦ Minimum deduction R12 000 ◦ Maximum deduction R200 000 ◦ Provident funds ◦ Limit withdrawals to one-third

21.  Retirement  Lump sum benefits - Retirement  0 - 315 0000%  315 001 – 630 00018% of amount above R315 000  630 001 – 945 000R56 700 plus 27% of amount above R630 000  945 001 and aboveR141 750 plus 36% of amount above R945 000

22.  Retirement  Lump sum benefits - Withdrawal  0 - 22 5000%  22 501 – 600 00018% of amount above R22 500  600 001 – 900 000R103 950 + 27% of amount above R600 000  900 001 and aboveR184 950 plus 36% of amount above R900 000

23.  Medical deductions  Contributions to medical schemes and qualifying out-of-pocket medical expenses ◦ R 720 for the first two beneficiaries each ◦ R 440 for each additional beneficiary ◦ Amount above 7.5% of taxable income  Non refundable tax credits from 1 March 2012 ◦ Relative relief does not increase as the marginal tax rate of the individual increase ◦ Discussion document by end of March 2011

24.  National health insurance  Phased in over 14 years  Subsidised by: ◦ Payroll tax ◦ VAT ◦ Personal income tax surcharge ◦ Co-payments and user charges

25.  Fringe benefits – Company cars  3.5% per month on the value (cost incl VAT)  3.25% per month on the value (cost incl VAT) if the vehicle has a maintenance plan  80% of fringe benefit to be included in remuneration  Percentage is reduced to 20% if employer is satisfied that at least 80% of use are for business purposes  Fringe benefit reduced on assessment if log book kept and submitted  Further relief on assessment if employee has borne cost of licence, insurance, maintenance and fuel for private travel (subject to logbook)

26.  General:  Consistent tax treatment of all forms of income from capital (interest, dividends, capital gains) to be considered  CG exclusions increased: ◦ Annual R 20 000 ◦ DeathR 200 000 ◦ SBC disposalR 900 000  Capital gains on forex (for individuals) to be removed  Withholding tax of 15% on gambling winnings above R25 000 from 1 April 2012 (including National Lottery)  Cross border withholding tax on interest – 10%

27. Corporate tax

28.  Corporate tax rates  Ltd, Pty (Ltd) & CC28%  Personal Service Companies33%  Foreign resident companies33%

29.  Small Business Corporation  0 – 59 7500%  59 751 – 300 00010% of amount above R59 750  300 001 and aboveR24 025 + 28% of the amount above R300 000

30.  Micro Businesses  Taxable turnover  0 – 150 0000%  150 001 - 300 0001% of amount above R150 000  300 001 – 500 000R1 500 + 3% of the amount above R300 000  500 001 – 750 000R7 500 + 5% of the amount above R500 000  750 000 and aboveR20 000 + 7% of the amount above R750 000

31.  Micro Businesses  Register for VAT from 1 March 2012  3 year bar on voluntary deregistration to be lifted  SARS empowered to register unregistered micro businesses  Only 7 700 businesses have registered  88% was registered previously

32.  Other taxes and duties  VAT14%  Securities transfer tax0.25%  Transfer duties (Individuals): ◦ 0 – 600 0000% ◦ 600 001 – 1 000 0003% of value above R600 000 ◦ 1 000 001 – 1 500 000R12 000 + 5% of value above R1 000 000 ◦ 1 500 001 and aboveR37 000 + 8% of the value above R1 500 000

33.  Other taxes and duties  Notional input VAT on fixed property:  Delinked from transfer duty  Lower of ◦ Selling price ◦ Open-market value ◦ Current municipal value ◦ VAT-inclusive acquisition price

34.  Other taxes and duties  STC10%  Dividends tax1 April 2012

35.  Other taxes and duties  Fuel taxes 93 Octane PetrolDiesel General fuel levy177.50 162.50 RAF Levy 80.00 80.00 Customs 4.00 4.00 Total261.50 246.51 Percentage of pump price29.6% 30.3%

36.  Tax administration  Voluntary disclosure program will remain open until 31 October 2011  Customs – systems modernisation  Audit – SARS to use data provided by credit bureaus to build tax payer profile and identify non compliance

37.  Tax policy research projects  Taxation of financial derivatives  Taxation of long-term insurers  Housing tax incentive (< R300 000) for developers  Provincial motor vehicle licence fees  Estate duty  VAT and education accommodation  VAT on treatment of public passenger transport services

38.  Finally…. “The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing” Jean Baptiste Colbert (Minister of Finance under King Louis XIV of France. 1619 – 1683)