SARS NOTICE: IMPLEMENTATION OF TAX DIRECTIVES ENHANCEMENTS

SARS have released a letter on 25 April 2022 detailing information about changes in respect of Tax Directives that have been implemented.

The SARS notice addresses Fund Administrators, Insurers, Tax Practitioners, Advisors and taxpayers.

Here’s a summary of the changes:

• Taxpayers who are members of pension preservation or provident preservation funds, who have reached retirement age and are 55 years and older are now allowed to transfer the retirement benefit to another preservation fund or a retirement annuity fund on a tax neutral basis on a Form A&D when using – reason [par 2(1)(c)] Transfer before Retirement.
• On retirement, taxpayers can now use two-thirds (⅔) or more of the retirement benefit in the fund to purchase a living annuity and / or a guaranteed annuity. Alternatively, they can keep a portion of the retirement benefit in the fund which will provide a pension / annuity. It is important to note that the condition placed on a purchase of an annuity is that the value of each annuity (living, guaranteed and / or remaining in the fund) must be R165 000 and above respectively.
• A new reason has been added to the IRP3a to cater for foreign companies that are not registered for Pay As You Earn (PAYE) to make severance payments to South African tax residents who have performed work within the Republic for the said company. When the employer pays the employee, the tax practitioner or SARS will select reason <Severance benefit – Paid by a non-resident Employer>
  • When the taxpayer / Tax Practitioner completes the return, a new field will be added to the ITR12 to cater for payments made by foreign entities.
    The taxpayer/Tax practitioner must select <Y>.
  • This will open a container whereby a new source code 3925 will be
    generated to capture the amount of the severance benefit received and the Tax Directive number which would have been issued for this purpose.

Access the official notice as sent by SARS here.

 

“Excelsiar is a member of Nowicki & Associates”

Credit: Nowicki & Associates” www.nowhr.co.za