The 2024 National Budget did not provide any major tax surprises, but key observations reveal subtle strategies by SARS to increase revenue. While the budget seemed rather vanilla, it is vital to recognise these hidden strategies and measures that can impact taxpayers' liabilities. In this article, we look at these strategies and measures.

In the aftermath of the 2024 National Budget speech which took place in February 2024, many taxpayers might have breathed a sigh of relief at the absence of tax hikes or significant tax amendments. The most noteworthy observation from the budget is the absence of changes to the tax rebates or the so-called "bracket creep", wherein inflation pushes taxpayers into higher tax brackets, as has been customary in previous years. 

Another important observation is that there have been no adjustments to abatements for estate duty tax and capital gains tax over the past several years. An example hereof is the section 4A abatement for estate duty taxes in terms of the Estate Duty Act 45 of 1955, which saw its last increase from R2.5 million to R3.5 million in 2007. In essence, this means that the effective tax rates at which capital gains tax and estate duty are levied have remained unchanged, and the failure to adjust these abatements over an extended period of time effectively translates into higher estate duty tax and capital gains tax liabilities for taxpayers (this is over and above the escalation of estate duty from 20% to 25% for estates above R30 million in value that came into effect on 1 March 2018).

It is no secret that broadening the tax base in the long term and enhancing tax compliance and administrative efficiency are core strategies of SARS. The absence of obvious tax hikes in the budget speech leads to a crucial question: what is not being said, and what is happening behind the scenes at SARS? 

While the budget speech may have appeared uneventful from a tax and estate planning perspective, it is necessary to dissect the finer details and consider the implications of static abatements and the broader strategy of tax collection. Despite the lack of obvious tax increases, taxpayers may find themselves facing higher liabilities due to these subtle yet impactful measures. 

Apart from new initiatives like the formation of the High Wealth Individual Unit, and a strong emphasis on the enforcement of the transfer pricing rules, SARS is committed to enhancing its capability to collect and disseminate information. This includes the introduction of AI data-driven processes and the outsourcing of specific functions to parties more effectively positioned to perform them. SARS is therefore actively developing the capacity to streamline the processing of information regarding offshore investments owned by South African tax residents. This information is obtained from tax authorities worldwide, in compliance with the internationally applied common reporting standard. These enhanced capabilities will result in improved tax collection and enforcement against non-compliant taxpayers in future. 

This makes it paramount for taxpayers to have a thorough understanding of the information that will be shared, disclosed, or reported between authorities in South Africa and globally. Taxpayers will have to ensure this is done appropriately and consistently now that reporting of information has emerged as an integral part of all planning and structuring and demanding careful consideration and attention.

The budget may have seemed uneventful at first glance, but lurking beneath the surface are strategic moves aimed at supporting effective tax collections in South Africa. As taxpayers navigate these complexities, it demands increasing vigilance and the need for proper strategic planning that is regularly re-assessed and updated to ensure that such caters to these underlying mechanisms that now shape our fiscal and investment landscape. 

For assistance with strategic estate planning and aligning your local and global reporting requirements don’t hesitate to make contact with our Estate Planning Team.

Visit our Estate Planning Team page. 


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