From 1 March 2022, the South African Revenue Service (SARS) will introduce changes for annuitants who receive income from multiple sources. This will apply to both compulsory and voluntary annuities.
Prior to 1 March 2022, the following applied:
Incomes were combined at the end of the tax year to determine the correct amount of tax that must be paid. The combined income placed the annuitant in a higher tax bracket. However, each income payer only deducted PAYE based on the income they paid during the year, which led to an under-recovery during the tax year – and resulted in the annuitant having to pay in the shortfall at the end of the tax year.
From 1 March 2022, SARS will use the latest data available to them, which will be based on the annuitant’s tax assessment of the previous tax year. This will enable SARS to determine a more accurate PAYE deduction during the year.
What does this mean for you?
- You do not have to do anything. SARS will provide the PAYE deduction percentage to the fund administrator or insurer, who must then use that rate to adjust PAYE from the annuity. This rate will be valid for the whole tax year.
- At any time, you may request the fund administrator to go back to applying the normal PAYE deduction and not the one provided by SARS.
Source: Glacier / Momentum