South African taxpayers who receive income from retirement funds and other sources will see changes in the monthly taxes they pay in 2022.
The South African Revenue Service (SARS) said it will introduce changes to its systems from 1 March 2022 to prevent taxpayers who receive income from more than one source – where one of the sources is income from a retirement fund – from paying extra taxes.
Previously, these taxpayers ended up with a large tax debt after assessment of their income tax return. The revenue collector said it is aware that significant tax debt can arise at year-end when all sources of income are combined to determine taxable income and the tax due.
“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,” SARS said.
“The effective rate of tax is based on the latest data available to SARS and that rate will be provided to the retirement fund administrators for purposes of withholding PAYE based on that data.”
This rate will then be made available via easyFile to the employer and will only apply to taxpayers who have a form of retirement income, SARS said.
SARS’ PAYE system allows for a taxpayer to request to be taxed monthly at a higher rate so that any tax due at year-end is adequately covered. However, not many taxpayers who fall into the category are making use of this option, the revenue collector said.
SARS commissioner Edward Kieswetter said the organisation remains committed to providing clarity and certainty to taxpayers about their legal obligations. SARS also strives to make it easy to comply through system changes such as this, it said.