Advice and Opinion

Increase in transfer duty threshold possibly in favor of small businesses

Budget Finance Generic

Commenting on the National Budget, Carol Reynolds, Pam Golding Properties area principal for Durban Coastal, says an interesting aspect of the increase in the transfer duty threshold from R750 000 to R900 000 is that this is good news for small business enterprises looking to acquire their own small sectional title office or light industrial space and who would be purchasing in a non-VAT related transaction.

“They would then benefit from the transfer duty exemption up to R900 000. In the Durban and North Coast areas even a very small warehouse or store room can be had for under R900 000″.

“However, the 45 percent tax rate for those earning a taxable income over R1.5 million will have a negative impact as this will affect individual disposable income,” she says.

“Seen against the backdrop of the dividend withholding tax being increased from 15 percent to 20 percent, we may expect more parallel movement in companies as they retain assets rather than draw dividends,” adds Reynolds.

“In other words they may keep recycling their funds within the companies and even possibly acquire more commercial properties.”