|Budget Speech 2014|
The Budget Speech 2014, by Finance Minister Pravine Gordhan, was presented under easing global economic pressure, but on the back of a weakening Rand due to the dollar strengthening in the global recovery. South Africa have shown some economic stability and resilience over the last five years of global economic crisis.
The current administration has prepared the National Development Plan (NDP) for implementation by the next government administration. Timed to perfection with the upcoming elections. Promising that the implementation of the NDP over the next five years will provide economic stability, job creation, capital and infrastructural development that will benefit all in the 20 year old democratic South Africa. This sounds like a submission of a curriculum vitae (CV), by a 20 year old, to apply for the job for the next five years. Will they be successful in their application?
Job Creation and Economic Transformation
6 million jobs were created by government in the last 5 years. To meet the job creation requirement, Mr Gordhan is asking for a "Vision and strategy shared by leaders and the people" between the public and the private sector. "A vision founded on realism and evidence. It is time for action and implementation."
Business' need to look at expanding operations and starting new ventures. Growth is needed in Manufacturing to stimulate the economy and employment. Incentives of R10.3 billion over the next 3 years are on the table for these expansions. Business owners need to make use of these for real development. With the weak Rand, exports are attractive. Entrepreneurs need to be creative and adventurous to take the raw materials in South Africa and manufacture them into useful products. South Africa has a good reputation for quality. Hopefully new developments will maintain these standards. Make use of the incentives. Give us a shout if you need help with the business proposals and business plans.
Small Business Corporation (SBC) Tax changes
The lower SBC bracket has increased to R70,700. The next bracket is unchanged at an upper limit of R365,000. The brackets had very minor changes. This is very disappointing as it has not taken into account inflation increases.
Employment tax incentives have been introduced for new employees below the age of 29 years. This PAYE rebate system was implemented a few months prior to the budget speech.
Turnover tax has seen no changes to the tax brackets
There is tax relief for individuals, particularly in the lower income brackets for taxpayers. A useful proposal to keep an eye on is that tax-free lump sum benefits will increase to R500,000.
Government is dependent on the private sector to create the jobs in South Africa. Capital Growth has been highlighted as a important for future job security. Make use of the incentives and weak Rand to develop your export markets.