The state budget has been allocated, and it’s no secret that the announcements that the Minister of Finance, Pravin Gordhan made, are going to affect all of us. That’s why it’s important for you understand what was said, and what changes to aspects such as property tax, tax-free savings, and debt management mean for you – and your pocket.
Are you planning to leave the nest, or become a first-time homeowner? If the answer’s yes, the Minister’s announcements around property tax should be music to your ears. Why, you might ask? The transfer duty threshold used to be R750 000 – which means that if you bought a house or apartment for less than that amount, you wouldn’t be asked to pay any transfer duties. Now, this threshold has been increased to R900 000, which means that you save R4 500. This is not only a boost for the property market, but also makes it easier for prospective homeowners to buy property.
Furthermore, the importance of building a savings culture has also been underlined in this year’s Budget Speech – because the more you can save, the better. The good news is, that you are now able to save an additional R250 per month, and an extra R3 000 per year – without having to pay tax on that amount, or the interest that you earn. This threshold has been increased from a previous R2 500 per month, and R30 000 yearly.
According to Minister Gordhan’s speech, we should however brace ourselves to see less of our hard-earned money at the end of every month. This is mostly due to increased tax proposals.
The main tax proposals are:
- A new top personal income tax rate of 45% for those with taxable annual incomes above R1.5 million.
- An increase in the dividend withholding tax rate from 15% to 20%.
- An increase of 30c/litre in the general fuel levy and 9c/litre in the road accident fund. This means that road users will pay a total of 39c more per litre from April.
- Increases in the excise duties for alcohol and tobacco, of between 6% and 10%. This means that you will roughly pay R4.50 more for a 750ml bottle of spirits, and an additional 12c per 340ml of beer.
Because you’re going to be required to stretch your money even further each month, it means that debt management becomes more important than ever before. But, not to worry because all isn’t completely lost. Here are a few things that you can do to manage your debt and keep your finances as healthy as possible:
- Know how much you owe – you can do this by listing the amount of money that you must repay to specific benefactors each month. This should be as detailed as possible, and must be updated regularly.
- Pay your monthly bills on time – whenever you make late payments, it makes it harder for you to pay your debt off, and when you miss more than two payments in a row, your interest rate and charges will increase.
- Prioritise your debt – when deciding which debt you have to pay off first, you should take a look at the credit with the highest interest rate and then prioritise that.
- Try to recognise the signs when you need help – make an attempt to realise when you’re struggling to pay off your debt, you might want to get assistance from a debt relief company.
Disclaimer: The advice contained on this blog is for general purposes only and does not take into account individual circumstances, objectives or financial needs. Accordingly, readers are advised to seek appropriate advice from licensed professionals prior to making any investment, or taking up a financial product or service.