The South African Revenue Service (SARS) will from 1 March 2022, introduce changes to its systems, in an effort to prevent large tax return debt for taxpayers who receive income from more than one source.
This, SARS said in a statement on Wednesday, would benefit taxpayers where one of the sources was income from a retirement fund. Until then, such taxpayers ended up with a large tax debt payable to SARS after assessment of their income tax return.
“SARS is aware that a significant tax debt can arise at year-end when all sources of income are combined in order to determine taxable income and the tax due,” it said.
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 was based on the latest data available to SARS and that the rate would be provided to the retirement fund administrators for purposes of withholding Pay-As-You-Earn (PAYE) based on that data.
This rate was then made available via [email protected]™ to the employer and would only apply to taxpayers who have a form of retirement income.
SARS said its PAYE system allowed for a taxpayer to request to be taxed monthly at a higher rate so that any tax due at year-end was adequately covered. However, not many taxpayers who fall into the category are making use of this option.
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.
Source: South African Government News Agency