Tax Directive Enhancements
SARS has published a letter explaining the practicalities of recently introduced legislation which provides for SARS to determine the effective tax rate in respect of the combined employment and/or pension sources of income of a taxpayer, and to provide the rate to the retirement fund administrators for purposes of withholding PAYE. This service may take effect from 1 March 2022.
SARS has advised that where a pensioner is in receipt of more than one source of income, a tax debt may arise at year-end when SARS combines all the sources of income together for purposes of determining taxable income and tax due.
While the PAYE system permits a pensioner to request that a higher amount of PAYE be deducted so that any tax due at year-end is adequately covered, not many pensioners are making use of this option, which then leaves them with a tax debt at year-end, which they did not budget for.
In response to this, recently introduced legislation makes provision for SARS to determine the effective rate of tax in respect of the combined employment and/or pension sources of income of a taxpayer, with reference to the latest data available to SARS, and to provide that rate to the retirement fund administrators for purposes of withholding PAYE
Retirement fund administrators will be required to use the rate provided by SARS in respect of remuneration paid or payable with effect from 1 March 2022.
For more information, please refer to the letter here.
19/11/2021
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