The Minister of Finance, Mr Enoch Godongwana, will deliver his inaugural National Budget Speech on Wednesday, 23 February 2022. While it is unusual for the Budget Speech not to take place at the National Assembly due to the Parliament fires, anything can happen!
It’s anyone’s guess which way the Budget Speech can go and what the impact will be on businesses and the Payroll & HR profession in 2022. In 2021, the Budget held some surprises but not all of the news was bad. Tax relief was enjoyed in certain areas.
Are you hoping for an uneventful 2022, at least in the legislative landscape?
This remains to be seen as the Minister of Finance delivers his first Budget Speech with quite the challenge set out for him, with many numbers needing to be balanced as our economy continues to take severe strain with the aftereffects of COVID-19, lockdown, the 2021 looting and most recently the burning of Parliament.
Here are a couple of topics we suspect may just be coming to the fore in this year’s Budget Speech.
1. INCOME TAX, WHAT TO EXPECT.
During the 2021 Budget, minister Mboweni increased tax brackets by an average of 5%, which was a little more than inflation, providing some relief to taxpayers in areas.
We are most likely not going to see a generous tax bracket adjustment this year however we highly doubt there will be an increase in personal income tax, but in saying that, bear in mind that Government remains under pressure to reduce the fiscal deficit.
2. EVER HEARD OF THE ‘TWO-POT’ RETIREMENT SYSTEM?
In summary, National Treasury has put forward proposals aimed at enabling limited access to retirement fund savings pre-retirement.
The ‘two-pot’ system as it is labelled, splits savings into two areas, the first allowing pre-retirement access to one-third of retirement savings and the other, the inaccessible two-thirds that continues to be invested.
The desired outcome is to provide financial relief where households are under pressure due to the current economic situation and loss of jobs because of the pandemic, all while trying to continue to balance continued retirement savings.
Should these new regulations be finalised before the Budget announcement, there may be different tax treatments for the “two-pots” to bear in mind and this may impact the payroll.
3. HOME OFFICE EXPENSES WILL QUITE CONFIDENTLY BE ADDRESSED, YET AGAIN!
Home office expenses remain a hot topic. In case you’ve missed it, SARS have rejected roughly 80% of home office expense claims in 2021. SARS officials physically visited homes in 2021 to ensure that home office claims are supported by the appropriate and legally required infrastructure.
2021 has seen a massive increase in taxpayers claiming for home office expenses, a trend that is likely to continue in 2022 and legislation will continue to be refined (more stringently so) as more claim anomalies rise to the surface.
Many have commented that the rules surrounding the requirements of a home office are somewhat unfair due to the incurrence of additional expenses, and in particular, the requirement to have a dedicated area in a home used exclusively for work, in order to qualify for certain deductibles.
4. NATIONAL MINIMUM WAGE (NMW) INCREASES
Employment and Labour Minister, TW Nxesi, has recently announced that the National Minimum Wage (NMW) for each ordinary hour worked has been increased from R21,69 to R23.19 for the year 2022. This comes into effect from 01 March 2022.
5. IF IT’S NOT GOING TO BE PERSONAL INCOME TAX, WHAT ABOUT CORPORATE TAXES?
If you recall the 2021 Budget, minister Mboweni at the time announced that the corporate tax rate would be reduced from the current 28% to 27% for companies with a year of assessment commencing on or after 1 April 2022.
This wasn’t addressed during the medium-term Budget Speech so it will be interesting to see what unfolds during the Budget Speech on this topic, if anything at all.
6. FINANCIAL RELIEF
With unemployment reaching record highs and several new relief funds being born in 2021, it will be interesting to see what Government’s strategy is to try and control what remains one of the biggest challenges in South Africa.
The ETI scheme was previously mentioned as a means to potentially provide employment opportunities for unemployed youth. This scheme has been very successful over the years and Government is investigating ways of extending/enhancing the ETI scheme to make it easier for the smaller employers to benefit from this initiative.
CONCLUSION
Join us at our Payroll Managers Tax Year-End Seminar where we will uncover the 2022 Budget Speech in detail. We will not only be covering the legislative changes surrounding the 2022 Budget Speech, but we will also be highlighting several amendments that were made during 2021 and the new data submission developments at SARS that will impact all businesses.
Attending this seminar will ensure that you are prepared for everything the legislative landscape sends your way and managing your payroll in 2022 can be a breeze if you are prepared.
Book your seat here.
