Taxpayers who received income from retirement funds on top of other sources will see some changes in the monthly taxes they pay in 2022.
The SA Revenue Service (SARS) plans to make changes to calculate the effective tax rates of people who receive income from more than one source, one of those being a retirement fund.
The tax collector said it will introduce changes to its systems from 1 March 2022 to prevent these taxpayers from accumulating large tax debts when they submit their income tax returns.
"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. 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," wrote SARS in a statement.
Currently, the effective tax rate for people who receive income from retirement funds and other sources is based on the data available to SARS. SARS then provides that rate to the retirement fund administrators to withhold pay as you earn (PAYE) tax.
But the PAYE system allows for taxpayers to request to be taxed monthly at a higher rate so that any tax due at year-end is adequately covered.
However, SARS said not many taxpayers who fall into the category make use of this option, resulting in them incurring a significant tax debt at the end of the tax year. This is the reason why the taxman is making these changes in 2022.