The most significant recent changes impacting the taxation of individuals in South Africa are as follows:
- The harmonisation of the tax treatment of payments to South African retirement funds to ensure consistent treatment of contributions, irrespective of the type of retirement vehicle that the person is a member of, was effective from 1 March 2016. The requirement that a provident fund will also only be able to pay out one third of the value of the fund as a lump sum on retirement (with the remaining two thirds having to be annuitised) will become effective on 1 March 2021.
- Donations tax and estate duty was previously levied at the rate of 20% (irrespective of the level of donations or the value of the estate). With effect from 1 March 2018, a higher rate of donations tax and estate duty of 25% applies to the extent that donations made during a tax year exceed 30 million South African rand (ZAR) or to the extent that the value of the estate exceeds ZAR 30 million.
- With effect from 1 March 2020, qualifying foreign employment income earned by South African tax residents will no longer be fully exempt as the exemption will be limited to ZAR 1.25 million. The amount above the ZAR 1.25 million exemption will be subject to normal tax in South Africa at the tax rate for that particular year of assessment.