‘No nasty surprises ahead’

2011-02-16 00:00

THE business community should not expect nasty surprise announcements relating to company taxes or any other aspects of the national budget when Finance Minister Pravin Gordhan delivers the 2011 Budget Speech later this month.

This is according to Leigh Bainbridge of Bainbridge Chartered Accountants, who told The Witness companies could, at best, receive an adjustment of the turnover threshold for tax — in favour of smaller businesses.

She said businesses with a turnover of less than R14 million may qualify to be taxed as a small business corporation.

Bainbridge believes this threshold could be increased this year.

However, vulnerable economic growth and softer revenues compared with the “boom years” between 2002 and 2007 will leave companies with little tax relief as Gordhan seeks to reduce the budget deficit.

Several years ago it was announced that South Africa would shift from a secondary tax on companies (STC) toward a dividends tax on sharehol­ders.

The transition meant companies would no longer bear the responsibility and liability of paying STC, essentially lowering South Africa’s effective corporate tax rate. The tax would be levied on shareholders.

Bainbridge said final legislation regarding the transition has not been promulgated due to complications within South Africa’s double tax agreements with other countries. An update regarding this transition is not expected.

Gordhan is likely to revisit the issue of the proposed National Health Insurance, adding it may eventually result in higher taxes on South Africans.

Two other areas of interest that could emerge in the budget speech are plans to modernise the public transport system and further incentives to support the growth of the “green economy”, Bainbridge said.

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