Monthly Archives: February 2017

Pravin_PSouth African Minister of Finance, Pravin Gordhan, announced the new budget for the 2017/18 financial year at parliament on 22 February 2017 which will affect property transactions in the following ways:

1. TRANSFER DUTY

Good news – the only change in transfer duty from the previous financial year is a reduction in transfer duty. In the previous year, the threshold for imposition of transfer duty started at R750 000. It will now only start at R900 000, which will certainly help purchasers at the lower end of the market, effective from 1 March 2017.

The new transfer duty scales are the following:

Value of the Property (R)  Rate
0 – 900 000 0%
900 001 – 1 250 000 3% of the value above R900 000
1 250 001 – 1 750 000 R10 500 + 6% of the value above R 1 250 000
1 750 001 – 2 250 000 R40 500 + 8% of the value above R 1 750 000
2 250 001 – 10 000 000 R80 500 +11% of the value above R2 250 000
10 000 001 and above R933 000 + 13% of the value above R10 000 000

Please find attached herewith our updated fee sheet for property transactions.

2. CAPITAL GAINS TAX

It is important to remember that Capital gains tax (CGT) is not a separate tax but forms part of income tax. A capital gain arises when you dispose of an asset for proceeds that exceed its base cost unless excluded by specific provisions.

CGT applies to individuals, trusts and companies. The maximum rate threshold for income tax for companies remains unchanged at 28%. In the case of individuals (and special trusts) as well as other trusts the maximum rate threshold changed from 41% to 45% which will also have an effect on the calculation of CGT.

Therefore, the maximum effective rate of CGT payable on the disposal of properties from 1 March 2017 are as follows:

  • Individuals and Special Trusts           18%
  • Companies                                         22.4%
  • Other Trusts                                       36%

3. DIVIDENDS TAX

The rate for dividends tax is increased from 15% to 20% for the 2017/18 financial year.

Credit:

VZK