Budget 2023/24 highlights: Lower income tax rates, renewable energy rebates, and RAF refunds for food manufacturers

Although the energy crisis dominated Finance Minister Enoch Godongwana’s 2023 Budget Speech, businesses and individuals were no doubt relieved that the minister didn’t announce any dramatic new tax measures.

In fact, income tax rates have been reduced to cater for inflation and to provide some relief from the cost-of-living crisis. This means your take-home pay increases. The annual tax-free threshold for a person under the age of 65 has increased to R95,750. People younger than 65 who earn R500,000 annually will pay about R3,000 less in income tax.

Here are other highlights from the Budget:

• The South African Revenue Service (SARS) is expecting higher gross tax revenue for the current tax year. This has allowed the government to allocate more money to the social wage bill, infrastructure, and debt reduction, without increasing taxes.

• The fuel and Road Accident Fund (RAF) levies stay the same, which will take some pressure off at the pumps – especially when paying for diesel to keep the gennies running during loadshedding. Food manufacturers can claim a refund on the RAF levy paid in buying diesel for their operations–one good reason to get your logbooks up to date!

• Businesses that invest in renewable energy in the new tax year can claim 125% of the cost of that investment back. If you install rooftop solar at home, you can claim a rebate of 25% of the cost of the panels–up to a maximum of R15,000. Now, that’s an incentive to go green!

• Medical tax credits have been increased to R364 per month for the first two members and R246 for additional members.

• The prescribed rate for reimbursive kilometres has increased to R4.64.

• Not much was said about the National Health Insurance (NHI), and it seems that the proposed two-pot retirement system will be delayed.

Apart from the changes announced in the budget speech, here are some other important amendments.

• From March 2023, remuneration based on an employee’s work performance will be classified as variable remuneration, which means PAYE must be withheld on these payments when it is paid and not when it ordinarily accrues.

• The Basic Conditions of Employment Act (BCEA) earning threshold has increased to R241 110.59 from March 2023.

• The National Minimum Wage has increased to R25.42 per hour for general, domestic and farm workers, effective March 2023.

The latest Budget does an admirable job of keeping taxes down, but we urgently need to catalyse growth to put South Africa on a more sustainable economic footing.

Download the Sage Budget Speech guide here for a complete list of changes, new tax rates and tables, and other important amendments.