More tax for thousands of retirees in South Africa
Thousands of retirees will find lower-than-expected pensions in their bank accounts at the end of this month owing to higher tax deductions. Thousands more already had this experience at the end of last month.
This is as a result of administrators implementing tax directives issued by the South African Revenue Service (SARS) in an attempt to ensure the correct tax is collected upfront from retirees who receive more than one pension or a pension and salary income, said consumer financial education website, SmartAboutMoney.
While in many cases the tax deductions may still be too low, there are a few cases where errors have crept into the tax directives applied to pensions being paid to retirees with more than one income, according to large retirement fund administrator.
There are mistakes in some of the directives at the lower income levels, Jenny Gordon, head of technical advice, investments, product and enablement at Alex Forbes, says.
Nazrien Kader, head of tax at Old Mutual, confirmed that a small number of pensioners have highlighted that they do not have any other sources of income and do not understand why an increased rate has been proposed by SARS.
Kader says Old Mutual continues to engage with SARS on the new tax rates and will keep pensioners informed on updates and changes to their policies.
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