By Willem Oberholzer, Director, KISCH Tax Advisory  

Given the 2025/26 Unity Budget, here are some strategic considerations for businesses and individuals to ponder and consider: 

For Businesses (Corporate Taxpayers):  

Leverage Tax Incentives and Reliefs:   

Businesses should take full advantage of the extended incentives. For example, if you operate in urban renewal zones, plan capital projects before 2030 to utilise the  UDZ tax depreciation benefit.  

Firms hiring young employees should maximise claims of the  Employment Tax Incentive at the new higher salary thresholds, as this directly reduces your PAYE payable. Companies investing in machinery or systems to save energy should capitalize on the extended Section 12L incentive by documenting energy savings for tax certificates.  

Consider renewable energy investments even without the 125% super-deduction; the standard 100% deduction for projects under 1 MW still offers a significant upfront write-off, lowering taxable income.  

Manufacturing or farming businesses should remember to claim the diesel fuel refund where applicable, as the government continues relief for primary producers, reducing effective fuel costs, which is vital during load-shedding when generators are used.  

By actively using these incentives, companies can enhance tax efficiency  and offset some of the tax burden. 

Engage in Infrastructure Opportunities:   

With massive infrastructure spending and PPP projects on the horizon (subject to compliance with BBBEE Legislative requirements), businesses in construction, engineering, energy, logistics, and finance should position themselves to participate.   

Public-private partnership reforms mean the process is now easier – consider proposing PPP projects or responding to calls in your sector. For instance, logistics companies might partner with Transnet on freight rail improvements or private investors could co-develop power grid expansions. Such projects may come with their own incentives (like government guarantees or favourable long-term contracts). While not direct “tax” benefits, they can significantly boost business growth and profits, indirectly improving your after-tax position. Engaging in infrastructure PPPs also allows capitalising on any tax-deductible financing costs and depreciation of assets used in these projects. Essentially, align your strategic plans with the government’s infrastructure agenda to benefit from public funds flowing into the economy. 

Ensure Robust Tax Compliance:   

Given SARS’s enhanced enforcement drive, companies must (not should) invest in their tax compliance systems and control environments. It is imperative to ensure that your record-keeping and e-filing processes are up to date to interface with SARS’s modernised, AI-driven systems.  

It is advisable to conduct an internal tax compliance audit. Verify that VAT is correctly accounted for (especially with the rate change to 15.5%; update your point-of-sale and invoicing systems on 1 April), that PAYE and UIF are correctly calculated (primarily if benefiting from ETI adjustments), and that corporate income tax filings fully disclose income (consider the impact of any base-broadening rules like interest deduction limits or controlled foreign company income under the Global Minimum Tax framework).  

If your business is multinational, start assessing your global effective tax rate; by 2026, if it is below 15%, you may need to pay a top-up. Planning ahead (e.g., reallocating certain deductions or income between jurisdictions) could optimise your tax outcomes. Also, be aware of transfer pricing rules and new profit-shifting regulations. Ensure that inter-company transactions have proper documentation to avoid disputes.  

In short, proactive compliance will save your business from costly penalties and audits in the new era of a more assertive SARS. 

Financial Planning for VAT and Cash Flow:   

Although the VAT increase primarily affects consumers, businesses act as collection agents and will need to manage this change. All VAT-registered vendors should adjust pricing or systems to account for the 15.5% rate from April.   

Cash flow planning is key as input costs may rise slightly with VAT, and output VAT collections will increase.  You will have to take care to ensure you remit the correct amount to SARS to avoid underpayment issues.  

If your business is in retail or consumer goods, consider absorbing a portion of the VAT increase on essential items to remain competitive or support your customer base (some retailers might round prices or hold off immediate price hikes on basics).  

Keep an eye on consumer spending patterns as the higher VAT might dampen demand marginally; adjust your sales forecasts and inventory accordingly.  

If you are a small business under the VAT threshold (not registered), note that input costs on supplies will go up, but you cannot claim credits.  You will have to factor that into your pricing and financing requirements. 

For Individual Taxpayers:

Adjust Your Budget and recognise that your take-home pay will effectively shrink against inflation due to the bracket freeze and higher VAT. 

If you earn additional non-salary income (freelance, rental, etc.), consider increasing your provisional tax payments or monthly PAYE top-ups to cover the extra tax from the unchanged brackets. This will prevent a large payable when you file your return.  

Update your budget to account for slightly higher expenses – e.g., allocate an extra few percent for groceries, transport, and utilities due to the VAT and sin tax changes. Planning for these small increases can help you avoid running into shortfalls. 

In a year with no new relief, it’s crucial to make the most of existing tax deductions. If you aren’t already, contribute to a retirement annuity (RA)  or increase your pension contribution through your employer. Contributions up to 27.5% of your income (capped at R350k) are tax-deductible – effectively, you get back 18–45% of that contribution in tax savings, which mitigates the bracket creep impact.  

Also utilise Tax-Free Savings Accounts  (up to R36,000 per year) to shield investment income from taxes, this won’t reduce your immediate tax bill but will avoid tax on interest or capital gains that could otherwise push you into higher brackets in future.  

If you have medical aid, continue to claim the medical tax credits  (though unchanged, they still reduce your tax by R364 per month for you and your first dependent, etc.). And keep receipts for any qualifying medical expenses  (e.g. chronic medication not covered by medical aid).  You may get an additional deduction if they’re high relative to your income.  

Homeowners with bonds could consider paying a bit extra into their bond rather than other investments; while bond interest isn’t tax-deductible, reducing debt in a high-interest rate environment is wise, and you can re-borrow if needed for a tax-deductible investment later. If you’re self-employed or earn a commission, deduct business expenses (fuel, data, home office costs if qualifying under current SARS rules) to lower your taxable income.  Every Rand of deduction is more valuable now since brackets weren’t adjusted. 

With VAT set to rise again next year (another 0.5% in 2026), plan the timing of significant expenditures. If you’re considering buying a car, appliance, or expensive electronics in the next year or two, you might save a bit by purchasing before the next VAT hike (and this year’s hike, effective April). A 0.5% difference on an R200,000 car is R1,000 – not massive, but worth considering alongside other factors (like expected price inflation of the goods).  

For regular spending, prioritise zero-rated essentials: buy fresh foods and the newly zero-rated items rather than prepared or processed foods that incur VAT. For instance, cooking meals at home from basic ingredients (many of which are untaxed) can stretch your grocery budget further than buying ready meals or takeaways (which include VAT). Also, if you can afford to,  stock up on non-perishables or household goods in March (at 15% VAT) to use during early April – essentially a one-time arbitrage on the VAT increase. Monitor retailers for any price-gouging around the VAT change; some may hold “VAT rollback” sales or delay passing on the full 0.5% to attract customers – take advantage of those promotions. 

Check which tax bracket your income falls into for 2025/26 (the thresholds are the same as last year. If you got a raise that pushes you into a higher bracket, even slightly, understand that the portion above the threshold is taxed at a higher rate. For example, crossing from the 31% bracket to 36% bracket at R512,800 will increase the marginal tax on that extra amount. Sometimes, you might negotiate with your employer to structure any bonuses or increases tax-efficiently.  

High earners might consider diversifying income streams for instance, income from investments (interest and dividends) has its own tax thresholds and rates. The interest exemption (R23,800 for under 65) is unchanged – use it if you have savings by earning interest up to that amount tax-free (perhaps through a fixed deposit). South Africa also still has a relatively favourable tax on capital gains and dividends (dividend withholding tax 20%, capital gains effectively taxed at 18% for individuals in top bracket). While you should not drastically alter investments just for tax, being aware of these rates might guide you to, say,  prefer growth stocks (for capital gains)  or tax-free accounts over interest-bearing accounts if you already exceed the interest exemption. 

Emergency Fund and Two-Pot System:  The new two-pot retirement system allows you to withdraw from your “savings pot” (one-third of new retirement contributions) once a year if needed. This can be a double-edged sword: withdrawals are taxed at your marginal rate, but if you face a financial emergency (job loss, medical need), this is an option to access cash rather than taking high-interest loans. Use it only as a last resort because taking out from your retirement early can hurt your long-term savings, and you’ll pay tax on it, which could bump you into a higher bracket that year. Instead, try to build or maintain a separate emergency fund outside of retirement accounts, even if just a small amount monthly. The goal is to avoid unplanned debt. Also, note that any withdrawal from the two-pot is treated as taxable income (added to your salary for the year); if you must use it, perhaps do so in a year where your other income is lower (to minimise the tax bracket impact). 

Tax laws can be complex, and this budget indicates that the government might introduce further changes (e.g., next year’s VAT increase or potential new social security taxes if a basic income grant is formalised). Keep an eye on the news and future budget speeches. It may be worthwhile to consult a financial advisor or tax practitioner to adjust your financial plan in light of the changes coming in 2025. Many South Africans don’t utilise all the tax relief available simply due to a lack of awareness. If you work from home and meet SARS’s criteria (such as a dedicated office space), you can claim home office expenses – which have recently become stricter but represent a significant deduction if applicable. In short,  proactively managing your finances with the tax changes in mind can help maintain your financial health despite the higher tax burden.