“Whilst the Rates Bill deals largely with the rate and threshold changes announced in the budget, the 2014 draft Taxation Laws Amendment Bill deals with the more substantive changes to the law. The 2014 draft Tax Administration Laws Amendment Bill deals with changes to the administrative provisions of tax legislation currently administered by the South African Revenue Service, including the Tax Administration Act,” National Treasury said in a statement.
The National Treasury department added that the 2014 draft Taxation Laws Amendment Bill (TLAB) gives effect to aspects such as the introduction of tax free saving accounts, where a proposed provision could be made to encourage household and individual savings.
Individuals in particular will be allowed to open a number of tax free savings accounts and contribute a maximum of 30,000 rand.
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Other proposed changes include changes to the taxation of Small Business Corporations, and refinements to the employment tax incentive.
The treasury however explained that the South African Revenue Service and other key stakeholders would be consulted before the proposed draft legislations are tabled.
Small Business Corporations in particular are expected to benefit from the proposed drafts within the particular section.
“The Davis Tax Committee concluded in its report on Small to Medium Enterprise taxation that the lower tax rates for Small Business Corporations are not effective, do little to support the objective of small business growth, and do not address compliance costs,” National Treasury explained.
“In addition, businesses in a tax loss position do not benefit from the current Small Business Corporations regime, despite having the same tax compliance burden as profit making businesses.”
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The employment tax incentive, which was introduced at the beginning of this year, in will also be under review. Refinements for the incentive include clarifying the incentive for employees who only work for a part of a month, and the reimbursement mechanism.