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Investments and Tax: The 2015 Budget Speech

Has the recent budget speech, a first for Mr Nhlanhla Nene, affected your investment, and the tax you pay on them, in any way? A wise investor knows what taxes are important and how they can be reduced. There are three important taxes to keep track of; none of the below taxes apply to your Retirement Annuity investment.

Interest Income (PAYE):
Last year each tax payer received an exemption of R23 800 for being under the age of 65, this means that the first R23 800 of interest you earn is tax free. This is remaining the same, which may affect low risk and retired clients who have large exposure to interest earning unit trusts.

Dividends Withholding Tax (DWT):
Every person who receives dividends has to pay 15% thereof across to SARS, in reality the company issuing the dividend holds this back and pays it to SARS on your behalf. This has remained the same for the 2016 tax year.

Capital Gains Tax (CGT):
Every time you sell an asset, including a unit trust investment (even if you switch or re-balance your investment portfolio), you may have to pay tax if the asset has appreciated in capital value. In the 2015 tax year the first R30 000 of all your gains for the tax year were excluded from calculating how much tax you have to pay, this will remain unchanged for the 2016 tax year. There has however been an increase in most individual’s marginal tax brackets by 1% point. This means that if you have to pay tax on a capital gain, it will be slightly higher than the last tax period.

A point to remember is that “You must pay taxes but there is no law that says you must leave a tip”. Always speak to your professional financial advisor before making financial decisions.