Insight · 22 February 2023
Budget speech summary 2023
Written by Stefan le Roux, Phillip Sampson, Celine Bakker, Luke da Silva
Minister Enoch Godongwana delivered his budget speech on the 22nd of February 2023 which has been at the backdrop of a difficult global economic outlook, exacerbated by not only the Covid-19 pandemic but also prolonged loadshedding impacting the survival of many businesses across all sectors and putting undue strain on South African households.
Minister Godongwana highlights in his budget speech that their “pursuit of higher growth remains anchored on three pillars:
Reporting Live from Cape Town are SL Law Partners, Stefan Le Roux and Phillip Sampson and supporting Professionals Celine Bakker and Luke da Silva.
Their thoughts regarding today’s Budget Speech:
The Global Outlook.
The International Monetary Fund projects the global growth to slow from an estimated 3.4% in 2022 to 2.9% in 2023. This follows from global economic risks remaining high, impeding growth due to the ongoing war in Ukraine. Nevertheless, the reopening of the Chinese economy could offer reprieve in supporting stronger rebound in global trade and demand.
On the positive side, South Africa’s economy grew by an estimated amount of 2.5% in 2022 as opposed to the projection of 1.9% in 2022, the third quarter of 2022 reflecting a better outcome than what was envisaged. According to Godongwana, “at R4.6 trillion, the size of the economy in 2022 was bigger than the pre-pandemic levels.
With real GDP growth is projected to average 1.4% from 2023 to 2025”.
Tax revenue collections exceeded the budgeted amount by R93.7 billion thereby giving South Africa an additional R93.7 billion at its disposal. R254 billion debt relief for Eskom thereby creating maneuverability in its balance sheet. From 1 March 2023 businesses may reduce their taxable income by 125% of the cost of an investment in renewables; individuals who install rooftop solar panels will be able to claim a rebate of 25% of the cost of the panels, up to a maximum of R15 000. Importantly, this incentive will be available for 1 year.
General fuel levy and the Road Accident Fund levy will not be increased this year. The personal income tax brackets will be adjusted for inflation, this will increase the tax-free threshold from R91,250 to R95,750.Additionally, medical tax credits will be increased by inflation to R364 per month for the first two members, and to R246 per month for additional members. The tax-free amount that can be withdrawn at retirement is increased to R550 000. Transfer duty brackets will also be increased by 10%, allowing properties below R1.1 million to avoid any transfer duty payments. The urban development zone tax incentive will be extended by 2 years to allow for the review of the incentive to be completed. An increase on the excise duties on alcohol and tobacco of 4.9%, in line with expected inflation. This means that the duty on: A 340millilitre can of beer increases by 10 cents, A 750-millilitre bottle of wine goes up by 18 cents, A 750-millilitre bottle of spirits will increase by R3.90, A 23-gram cigar by R5.47, and on a pack of 20 cigarettes, the duty rises 98 cents. R1 billion is allocated to South African Airways to assist the carrier with the business rescue process. The South African Post Office is allocated R2.4 billion
Estate Duty & Administration
The SL Law team understands making a will is one of the most thoughtful decisions you will ever make, and therefore unwaveringly adopts a sympathetic and personalised approach, realising that the client relationship does not terminate on passing.
Property Tax Calculations
The costs of transferring ownership of property into your name comprise costs due to the government in the form of transfer duty, legal costs as well as a number of payments the attorneys have to make to obtain clearances.
Capital Gains Tax Quick Guide
Introduced to South Africa in 2001, which imposed a tax liability on the disposal of assets after 1 October 2001. Capital Gains Tax forms part of Income Tax and is reflected on the taxpayer’s annual Income Tax Return.
Estate Duty & Administration
The SL Law team understands making a will is one of the most thoughtful decisions you will ever make, and therefore unwaveringly adopts a sympathetic and personalised approach, realising that the client relationship does not terminate on passing.
Property Tax Calculations
The costs of transferring ownership of property into your name comprise costs due to the government in the form of transfer duty, legal costs as well as a number of payments the attorneys have to make to obtain clearances.
Capital Gains Tax Quick Guide
Introduced to South Africa in 2001, which imposed a tax liability on the disposal of assets after 1 October 2001. Capital Gains Tax forms part of Income Tax and is reflected on the taxpayer’s annual Income Tax Return.
