Madam Speaker, hon members, I don't know what I did to cause this exodus. [Laughter.]
The Revenue Laws Amendment Bill is before the House. Last year we passed legislation that simplifies a complex formula for taxing lump sum withdrawals on retirement. These Bills now simplify the taxation of lump sums from retirement funds before retirement. The two sets of rules are aligned. Firstly, to provide relief, especially when a person becomes unemployed, the first R22 500 of preretirement withdrawals will be tax free. However, the withdrawals will be taxed on an accumulative basis. So, subsequent lump sum withdrawals will be added in tax at a higher rate.
New rules will provide for a default approach that will trigger tax only when amounts are actually withdrawn from the funds. The tax liability for the unwary who keeps their contributions within retirement funds when changing jobs has been eliminated. In terms of divorce, the new rules enhance a clean-break principle. Spouses can now fully divide their retirement savings upon divorce with taxes applying only if a spouse makes a withdrawal.
A second amendment proposed in this Bill before the House is the Secondary Tax on Companies, STC - the dividend tax. This Bill marks a milestone in switching from the STC at a company level to a dividend tax on shareholders, thereby making our tax system more globally compatible.
Thirdly, the Minister of Trade and Industry would want me to mention that there are a series of incentives for industrial policy projects to improve the competitiveness and energy efficiency of our manufacturing sector. Did you know that this is in the Bill, Minister? [Interjections.] Good. The purpose of this initiative is to promote new industrial investments, as well as to upgrade our existing manufacturing asset base and skills. The Bill makes provision for incentives to the value of over R5 billion for both capital investment and skills training.
Fourthly, at the other end of the scale, there are small businesses. Although microbusinesses can be significant contributors to reducing poverty, they face a number of hurdles. Part of what this Bill does is to deal with the venture capital initiative to support micro and small businesses.
The Minister of Housing was distracting you a moment ago, Minister Mphahlwa, because there is a provision in here that deals with low-cost housing. As government, we committed significant resources on the construction of low-cost housing. Well, this effort resulted in substantial progress. More needs to be done. This legislation provides incentives for employers and landlords to invest in low-cost housing. Qualifying low-cost housing will be depreciable at a 10% annual rate.
In respect of urbanisation - the urban development zones - we introduced this as an amendment in the Income Tax Act a few years ago. It has been extremely successful to work at the revitalisation of decaying urban areas. It will be extended for a further five years. In addition, the accelerated depreciation for new buildings in the designated zones will be announced.
Madam Speaker, I take pleasure in placing the Revenue Laws Amendment Bill before the House. I thank you. [Applause.]