As mentioned in the budget, the “cap” tax relief will effectively fall away and be replaced by a tax “credit” system. In essence, tax relief will be applied to medical aid contributions by means of a tax rebate instead of reducing remuneration by the value of the cap amount. A discussion document has been made available which further clarifies the “credit” system. It also investigates the possibility of using the tax credit system for medical expenses paid by the employee / individual. Our understanding so far is that the intention is to change the method of calculation for tax relief and not to change the principle of taxing medical aid contributions. More about this topic will be made available once response to the working paper has been received, digested and finalised.
There has been no further update on the proposed reforms regarding taxation and administration of retirement funds, other than the fact that they have been postponed until later on in the year. At this stage, there is no indication as to whether or not the proposed reforms will be effective from March 2012 or a later date.
The Youth Subsidy scheme proposed in the budget (effective March 2012) has not been finalised yet. More about this is expected later on in the year.
The National Health Insurance scheme also proposed for implementation in March 2012 has not been included in the draft amendments. Again, more on this topic should be available later on in the year.
We attended a lunch and presentation, hosted by the Department of Social Development on 17 July, regarding Pension Reform Presentation. It appears that over the next 3 years the detail will be with the legislators and we can expect a roll out in approximately 2015. In the next reporter, we will prepare an overview of what we believe were the important points covered.