How will the 2022 Budget changes affect you?

The annual National Budget Speech was delivered on 23 February 2022 by Finance Minister Enoch Godongwana. Practitioners are getting to grips with some of the more pertinent changes that will become a reality for taxpayers, particularly in the individuals, employment and savings areas.

Reviewing the timing of accrual and incurral of variable remuneration


Section 7B of the Income Tax Act (1962) allows for the taxation of variable remuneration to be deferred to the date when the amount is paid to the employee rather than when it accrues to the employee. The act provides that any amount of variable remuneration paid by the employer to the employee is deemed to accrue to the employee on the date during the tax year in which the amount is paid.


Under the Income Tax Act, variable remuneration includes (i) overtime pay, bonuses or commission; (ii) an allowance or advance paid for transport expenses; (iii) an amount the employee becomes entitled to as a result of unused leave; (iv) any night shift or standby allowance; or (v) any amount paid or granted for reimbursement as contemplated in the act. Government is aware that this list may not fully cater to all types of variable remuneration. While the inclusion of commission caters for performance‐based payments that form part of the employee’s salary in the formal sector, it does not cater for the informal sector, where such payments may be calculated based on units produced (because the word “commission” means a percentage‐based payment and is not determined based on units produced). Government proposes that changes be made to section 7B to cater for these performance‐based variable payments.

Apportioning the interest exemption and capital gains tax annual exclusion when an individual ceases to be a tax resident


In 2012, section 9H(2)(b) of the Income Tax Act was clarified to provide that, when an individual ceases to be a South African tax resident, their year of assessment is deemed to have ended on the date immediately before the day their tax residency ceased. The section further provides that the individual’s next succeeding year of assessment will start on the day on which tax residency is ceased. As a result, the individual has two years of assessment during the 12‐month period, which means the individual may double‐up on certain exemptions or exclusions that are allowed per year of assessment. This goes against the policy rationale of the provisions of the act. To address this anomaly, the government proposes that the legislation be changed to apportion the interest exemption and capital gains annual exclusion in such instances.

We eagerly await the legislative amendments to support these proposed regime changes.


This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your adviser for specific and detailed advice. Errors and omissions excepted (E&OE)