Pretoria – Two tax Bills that will give employees some breathing space will today be published for public comment.
In a statement, the National Treasury announced that it would publish the 2013 draft Taxation Laws Amendment Bill and the Tax Administration Laws Amendment Bill, and said the two drafts will give effect to most of the tax proposals that were announced in the 2013 budget review.
Amongst a list of proposals, the Draft Taxation Laws Amendment Bill proposes that income protection insurance premiums – that cover employees in an event of retrenchment - be non-deductible and that the pay-outs be tax free.
Currently, only the disability and life cover insurance covers are non-deductible and tax free.
“It is proposed that these principles (non-deductibility of premiums and tax-free pay-outs) be extended to income protection policies to ensure that there is uniformity in the treatment of polices that relate to personal cover for individuals,” the statement said.
The Bill also proposes that employees in the low income-tax bracket, who benefit from their employer’s housing schemes, be exempted from paying a fringe benefit tax on the difference between the market value of the property and the amount paid by the employee.
“Housing programmes initiated by employers for the benefit of their employees are hindered by the fringe benefit tax that an employee will pay on the difference between the market value of the property and the amount paid by the employee.”
Once the Bill is made a law, those earning an annual salary of not more than R200 000 - who acquire a property that is not worth more than R350 000 - will not pay the fringe benefit tax.
New tax regime for business, maritime industry
Other reforms proposed in the Bill include tax incentives for companies that operate within Special Economic Zones that have been approved by the Minister of Finance in consultation with the Department of Trade and Industry.
This will see companies that operate from within these zones being eligible to accelerated depreciation allowances on capital structures and an employment incentive and a VAT and customs relief.
Recently, the government has noted debates on how the maritime industry can be revived, and calls were made for tax laws to be relaxed as a way of assisting the sector to remain sustainable.
The draft Bill proposes a new shipping tax regime, which exempts qualifying companies from income tax, capital gains tax, dividends tax, and withholding tax on interest.
“This tax relief would form part of the integral policy alignment by the Department of Transport to revive the maritime sector in South Africa. These complete exemptions are more favourable than the initially proposed tonnage tax for South Africa,” the National Treasury said in a statement.
The National Treasury has called on the public to submit comments on the drafts by no later than the close of business on 5 August 2013. – SAnews.gov.za
