24 July 2012 at 13:31
The different rebates are designed for those taxpayers who are at different stages of their lives. Those younger than 65 have different earning potential and have not retired yet so are earning different and higher forms of income. In most cases, as the age of the taxpayer increases so do their costs of living and so allowances need to be made for this. Also given the mandatory retirement age of 65 it would not be fair to expect those taxpayers to have the same taxpaying threshold as those still working.
SARS and government have realised that due to people living longer a 3rd tertiary rebate had to be introduced to cater for those taxpayers living off savings and interest who, in my opinion, should not be taxed or at the very least at a high threshold.
SARS will be re-looking at the rebate system so we wait to see what will happen.
The change over from STC to dividends tax, in theory does not have any effect, but to shift the tax burden to the shareholder as opposed to the company. Companies would not declare dividends due to the STC expense which was a double tax on profits. Shareholders would not get a tangible return on their investments which should be used to put back into the economy thus increasing growth etc. Now companies are not paying that secondary tax and again in theory should be more willing to declare a dividend. The other major difference is the dividends tax of 15% whereas STC was 10%.
Administratively the responsibility is still on the company to pay over this tax and so that hasn't changed.