A_P_2015_04

44 African Pilot April 2015

CHANGE IN TRANSFER DUTY RATES

Transfer Duty is a tax levied on the value of any property acquired. Home
buyers in the middle to upper-middle income household’s category will be
granted relief on transfer duties. From 1 March 2015, no transfer duty will
be payable on property acquired up to the value of R750,000, which has
increased from R600,000 last year. This is good news if you are purchasing a
property under the value of R750,000. A R150,000 increase in the exclusion
value is a great relief for many fi rst time buyers in the middle/low income
class, but what does it mean for the upper-middle and high-income class? In
short, if you are purchasing a property for more than R 2,250,001 then you
will actually be paying more.

Example of transfer duty payable on a R2,000,000 property in 2014 vs. 2015:
2014: R149,000 2015: R145,000

Example of transfer duty on a R3,000,000 property in 2014 vs. 2015:
2014: R229,000 2015: R247,500

Here are the new transfer duty rates:

Source: SARS

CHANGES TO THE INSURANCE INDUSTRY TAX RULES

This is very important news for any professional pilot who has income disability
or local loss of licence insurance in place. We have all been accustomed to
our income disability premium being tax deductible and the understanding
that we will be taxed on the income received in claim. This is now a thing of
the past. Premiums paid towards income disability products are no longer
tax deductible and the proceeds or monthly income in claim will no longer
be taxed. This is great news for all the people who are in claim, as their
income has increased by their marginal tax rate overnight! However, what

does it mean for the professional pilot who pays monthly premiums? Simply

put: There is a real chance of you being over-insured if you elected to do

proper fi nancial planning and insured your full salary. The opportunity exists

to reduce this cover to what your actual after-tax needs may be and rather

investing, saving, or paying off your bond faster with the freed-up funds. It also

gives you the opportunity to have an independent review of your insurance

policy with an aviation specialist that truly understands the industry and what

the possible tax implications may be for your specifi c situation.

CHANGES IN THE INCOME TAX RATE

For anyone earning above R181,901, the tax rate has increased by 1%

across the board. As an example, if you earn R500,000 PA, you will have

roughly R42 per month less in your pocket. This can be rectifi ed by a good

RA, but that is an entire article on its own. This of course is not a concern for

the professional charter pilot who fl ies contract work in other countries and

thus is exempt from local income tax under the foreign employment income

exemption - 184 full days out of the country, of which a minimum of 60 days

must be consecutive. (South African tax under section 10(1)(o)(ii) of the Act.)

Here are the new income tax rates 2015-2016:

Source: SARS

An expert fi nancial planner will look at all these variables and advise each

individual on his or her specifi c needs and cost-saving possibilities. A solid

fi nancial plan, good management of your assets and risk cover, and regular

reviews of your policies will ensure peace of mind. I hope this article has

provided you with some insight into a few of the important changes brought

on by the 2015 Budget and that you can use this information to improve your

current fi nancial position.

For more information contact Franz Smit

Cell: 084 979 8632 • e-mail: [email protected]