Consumers have been under constant financial pressure with the interest rate hikes, fuel price increases and rising food prices. The South African government has made a few changes to the budget to try and ease some of these pressures. Bernard Jarvis, Financing Manager at iMasFinance Belville, unpacks some of these changes that will help consumers cope with the current economic pressures:
1. The income tax rates and bracket adjustments mean taxpayers will now pay less, how can individuals take advantage of this?
This is a welcome relief especially with the tough economic climate experienced over the last couple of years. Instead of falling into the trap of more money more spending, individuals should cultivate a culture of saving and managing debt. The bracket adjustments will indeed provide some relief, especially for lower income groups.
2. Retirement tax withdrawals have been adjusted; how does it affect pension-backed home loans?
The adjustment made, specifically around allowing individuals to access their funds due to financial distress speaks to exactly that – financial distress. The pension-backed lending market will be impacted by slow growth in this sector. With that said, I do believe that restrictions will play a major role in accessing these funds which will subsequently turn the tides in terms of take-up via financial service providers.
3. The brackets of transfer duty will be increased by 10% allowing properties below R1.1 million to avoid any transfer duty payments. What impact does this have on future homeowners?
The ability to put a foot on the property ladder for first-time home buyers have now become a reality. Future homeowners should reassess getting into the market and take advantage of this tax-free option. This option could make it easier to invest in property and allow for first-time buyers to take advantage of solar options that will address, to an extent, the current electricity crisis.
4. The solar panel tax incentive aims to assist households with a reliable energy supply. Is this sufficient to solve the energy crisis?
I do not believe this will completely solve the energy crisis. However, the more households that can get off the grid, the more likely South Africa will journey to moving away from this crisis. At iMasFinance we offer pension-backed home loans that can be used for financing solar energy. It is advisable to invest in solar energy, not just from a sustainable energy point of view, but also from a long-term cost saving perspective. Solar power could increase the value of your home.
5. What type of changes one implement to cope with the current economic climate?
Creating a budget and setting financial goals, whether as an individual or household, is essential as it serves as a guide to influence spending behaviour. At iMasFinance we believe that the key to financial wellness is education – that is why we offer financial wellness training to those employed at corporates that have agreements with us. We train individuals on how to compile a budget, how to save, manage their debt responsibly and advise on the importance of securing one’s belongings and future.