I want to get a tax directive

• 18 March 2024 – Tax Directives software update two pot retirement system 
  
  To facilitate the upcoming two-pot retirement system changes, SARS will be making enhancements to the Tax Directives process. The changes are detailed in IBIR-006 Tax Directives interim Interface Specification Version 6.701. Once the law has been promulgated, an updated version of the Interface Specification will be made available. SARS will also communicate trade testing dates in due course.
  
  
• 6 March 2024 – Processing of applications for involuntary transfer before retirement (Par 2[1][c] of the second schedule)
  
  

  Paragraph 2(1)(c) of the Second Schedule to the Act regulates the amount to be included as gross income for any year of assessment in respect of any amount transferred for the benefit of a member of a retirement fund on, or after normal retirement age, (as defined in the rules of the fund), but before the member elects to retire from that retirement fund, minus any deductions allowed under paragraph 6A of the Second Schedule to the Act. 

  Prior to 1 March 2022, paragraph 6A of the Second Schedule to the Act allowed the full value of the amounts transferred for the following transfers as deductions, resulting in these transfers taking place on a tax neutral basis:

  • Transfers from a pension fund into a pension preservation fund, provident preservation fund, or a retirement annuity fund; and
  • Transfers from a provident fund into a pension preservation fund, a provident preservation fund, or a retirement annuity fund.

  From 1 March 2022, Paragraph 6A of the Second Schedule to the Act also allowed for transfers into a similar fund by a member of a pension preservation or provident preservation fund (who has reached normal retirement age in terms of the fund rules but has not yet opted to retire from the applicable preservation fund). As a result, these individual transfers would also take place on a tax neutral basis.

  To ensure parity among members of retirement funds who are subject to an involuntary transfer — and who have reached normal retirement age in terms of the fund rules, but have not yet opted to retire from the fund — the following changes have been made in the Act:

  • Such individuals can have their retirement interest in that pension fund or provident fund transferred to another pension fund or provident fund without incurring a tax liability.
  • The value of the retirement interest, including any growth, will remain ring-fenced and preserved in the receiving pension or provident fund until the member retires from that fund. This means that these members will not be entitled to the payment of a withdrawal benefit in respect of the amount transferred.

  If a member has reached retirement age, but has not opted to retire and is subject to an involuntary transfer, follow these application steps:

  • Go to Find a Form 
  • Print Forms A and D from the SARS website.
  • Manually complete all required fields and select Transfer Before Retirement (Par 2[1][c]) as a reason for the directive.
  • Manually edit (scratch out) the transferee type so that the only options are either a Pension Fund or a Provident fund.

  Email the completed Tax Directive application to [email protected] with the subject line, “Involuntary Transfer Before Retirement (Par 2[1][c]) Form A&D.

  Processing time will be up to the standard 21 days.

• 26 February 2024 — SARS has enhanced the Tax Directives system in line with legislative and system requirements. 
  View the post implementation letter.
  
  
• 21  February 2024 – Tax Directives changes and enhancements

SARS plans to introduce enhancements to the Tax Directives system on Friday, 23 February 2024, in line with the IBIR-006 Tax Directives Interface Specification Version 6.601.

The following enhancements will be introduced:

• • Taxation of local and foreign income, which will cater for South African citizens who earned income both locally and abroad in one Year of Assessment, but who do not qualify for section 10(1)(o)(ii).

  • Free portability between funds, such as with transfers to unclaimed benefit funds:

    • The provisions of the Income Tax Act confirm that a deduction equal to the value of the amount transferred will be allowed as a deduction for any transfer from a pension fund and pension preservation fund (including an unclaimed-benefit pension preservation fund).

    • This means that the transfer will be tax neutral.

    • The update to the directives system will allow the “Transfer – Unclaimed Benefits” (code 48) to account for transfers between pension, preservation, and provident funds, and unclaimed-benefit funds of each type.

  • Free portability between funds: the following fund types will be added to the eFiling RT01 screen drop-down menu:

    • Unclaimed Pension Preservation Fund.

    • Unclaimed Provident Preservation Fund.

Please do not submit Tax Directives files on the current form form after 16:00 on 23 February 2024. SARS will queue and process such files after we have upgraded the Tax Directive system.

• 6 February 2024 – Trade testing dates and software implementation: Tax Directives

  SARS will introduce enhancements to the Tax Directives process as indicated in the IBIR-006 Tax Directives Interface Specification Version 6.601.  Trade testing is planned to start on 12 February 2024 to prepare for the implementation of the software by end February 2024. In the event that dates are changed, SARS will communicate accordingly.

  The Tax Directives Interface Specification is available here and you are encouraged to review it prior to testing.

  Please follow these steps to submit test files:

  Step 1: Before testing can commence, you will need to email 10 taxpayer reference numbers to [email protected]  to ensure the numbers are active.  In the email subject line, use “Tax reference numbers for Trade Testing”. A maximum of 10 taxpayer reference numbers will be allowed.

  Step 2: You will be notified via the same email address to confirm when testing may commence.

  For trade testing queries please email [email protected].

• 7 December 2023 – Tax Directives Interface specification version 6.601 
  
  SARS will implement enhancements to the Tax Directives process as indicated in the IBIR-006 Tax Directives Interface Specification Version 6.601. The trade testing dates are still to be confirmed and the software is scheduled to be implemented by end March 2024.
  
  Stakeholders will receive communication with regards to the exact dates for trade testing and the implementation date closer to the time.
  
  Please note that the enhancements planned relating to IBR-006 Tax Directives Interface Specification Version 6.601, does not include any changes in relation to the Two Pot System. The changes in respect of the Two Pot System will be communicated in due time.
  
  Please follow these steps to submit test files:
  
  Step 1: Before testing can commence, you will need to email 10 taxpayer reference numbers to [email protected] to ensure the numbers are active. In the email subject line, use “Tax reference numbers for Trade Testing”. A maximum of 10 taxpayer reference numbers will be allowed.
  
  Step 2: You will be notified via the same email address to confirm when testing may commence.
  
  For trade testing queries please email [email protected].
  
  

• 18 September 2023 – Enhancements to the Tax Directives system have been successfully implemented

Enhancements were successfully in line with the ‘IBIR-006 Tax Directives Interface Specification Version 6.505. We appreciate your continued support in our endeavour to provide clarity & certainty and make it easy for taxpayers and traders to fulfil their obligations whilst ensuring safe & secure digital platforms, we continuously maintain and enhance our systems.

Thank you to those who assisted us with the Trade Testing for this solution, your participation and cooperation is valued.

• 15 September 2023 – Tax Directives changes and enhancements
  
  Prior to 1 March 2023 a member of a retirement annuity fund could only transfer all the contracts / policies in that retirement annuity fund to only one other retirement annuity fund.

With effect from 1 March 2023 the definition of “retirement annuity fund” was amended to provide a member with more than one contract / policy in a retirement annuity fund can now transfer one or more of these contracts / policies to another approved retirement annuity fund, subject to the following conditions:

• • The transfer value of the member’s interest must exceed R371 250 per contract / policy. Therefore, the value of each contract / policy must be equal to or more than R371 250 to be able to split the transfer to multiple approved retirement annuity funds. If any of the contracts / policies value is less than R371 250 the member cannot transfer to more than one retirement annuity fund.
  • If the total member’s interest is not transferred, the amount remaining in the retirement annuity fund must exceed the amount of R371 250.

The monetary restriction of R371 250 will not be applicable per transferring contract / policy when the member’s entire interest in one retirement annuity fund is transferred to another retirement annuity fund (i.e. not transferred to more than one retirement annuity fund).

Tax directive system and application forms enhancements

Form C retirement annuities

• • The tax directive system and the Form C tax directive application form was enhanced to allow up to four contract/policy to be transferred to multiple approved retirement annuity approved funds.
  • The tax directive system will reject a tax directive application if:
  • The amount to be transferred is split in such a way that the value of each contract/policy does not exceed R371 250; and/or
  • The remaining amount in the retirement annuity fund does not exceed the amount of R371 250, in circumstances where the member’s vested interest is not transferred in full.

Recognition of Transfer (ROT) decline message

A significant number of ROT’s are outstanding. Therefore, some of the ROT rejection error messages have been updated to provide more detail as to why the ROT submission was rejected, to help the Fund Administrators and Long-term Insurers to better understand the reason for the rejection and to assist in the submission of the ROT’s.

The following Guides and Forms were updated:

Guides:

• IT-AE-41-G02 – Guide to Complete the Lump sum Tax Directive Application Forms – External Guide
• IT-AE-41-G03 – Guide to Complete Submit and Cancel a Recognition of Transfer – External Guide

Forms:

• FORM-AD – Request for Tax Deduction Directive Pension and Provident Funds – External Form
• FORM-B – Request for Tax Deduction Directive Pension and Provident Funds – External Form
• FORM-C – Request for Tax Deduction Directive Retirement Annuity Funds – External Form
• FORM-E – Tax Deduction Directive After Retirement and Death Annuity Commutations – External Form
• IRP3(a) – Application for Tax Directive Gratuities – External Form
• IRP3(c) – Application for Tax Directive Fixed Amount – External Form
• IRP3(q) – Variation of Employees Tax – External Form
• IRP3(s) – Application for Tax Directive Share Option – External Form
• NR03 – Tax Directive Application by Non Resident Seller of Immovable Property in SA – External Form
• ROT01 – Recognition of Transfer Between Approved Funds – External Form
• ROT02 – Recognition of GN18 Purchase of Member or Beneficiary Owned Pension or Annuity – External Form

• 13 September 2023 – Frequently Asked Questions (FAQs) for Tax Directives
  
  The following FAQs were published for the planned enhancements on 15 September 2023:

• • • What is the purpose of the new legislation? 
    • Is there any restriction when transferring the total interest to another retirement annuity fund?
    • If my policy is R500 000, can I transfer R371 250 in terms of de-minimis rule?
    • When will Recognition of Transfer (ROT) be withdrawn?
    • What are the changes on the Recognition of Transfer (ROT)?
• 12 September 2023 – Updated specification to include validation change

  The specification was updated from version 6.504 to 6.505. The updated IBIR-006 Tax Directives Interface Specification Version 6.505 specifies the additional validation change to be implemented on 15 September 2023. 

  The additional validation change is in respect of asylum seekers and refugees relating to the permit number. You are encouraged to implement the validation change as soon as possible. 

  Please feel free to join us for a MS Teams Meeting on 15 September 2023 at 10:00 to discuss the validation:

  • • MS Teams
    • Meeting ID: 342 064 442 52
    • Passcode: KRrLEu

  Please follow these steps to submit test files if you need to test this validation change:

  Step 1: Before testing can commence, you will need to email 10 taxpayer reference numbers to [email protected]  to ensure the numbers are active.  In the email subject line, use “Tax reference numbers for Trade Testing”. A maximum of 10 taxpayer reference numbers will be allowed.

  Step 2: You will be notified via the same email address to confirm when testing may commence.

  For trade testing queries please email [email protected].

• 7 September 2023 – Upgrade of Tax Directives platform on 15 September 2023
  
  With reference to our previous communication, enhancements to the Tax Directives system will be made in line with the IBIR-006 Tax Directives Interface Specification Version 6.504. In support of this we have a planned enhancement to the Tax Directives system scheduled for Friday, 15 September 2023.

  Kindly note that no Tax Directives files on the current production form version should be submitted after 16:00 on 15 September 2023. Tax Directives files using the new form version sent after 16:00 on 15 September 2023 will be queued and will be processed after the completion of the system upgrade.

• 30 August 2023 – Tax Directive system enhancements scheduled for September 2023.
  
  

  The South African Revenue Service (SARS) will be implementing enhancements to the Tax Directives system during September 2023.

  Please familiarise yourself with the following anticipated changes:

  Paragraph (b)(xii)(bb) of the definition of “retirement annuity fund” in section 1(1):

  A member with more than one contract / policy in a retirement annuity fund can transfer one or more of these contracts / policies to another approved retirement annuity fund, subject to certain conditions. When transferring a contract / policy, the Fund Administrator must ensure that the value of the individual contract / policy in the retirement annuity fund being transferred to another retirement annuity fund is R371 250 and above, and that if an amount remains in the fund, the remaining value in the retirement annuity fund after the transfer, is at least R371 250. If the member’s total interest (all contracts / policies combined) in the retirement annuity fund is being transferred to one other retirement annuity fund, the monetary restriction on the value per transferring contract or policy is not applicable, and the member’s total interest can be transferred from one retirement annuity fund to another. Please note that this change is only applicable to transfers prior to retirement that take place from one retirement annuity fund to another retirement annuity fund.

  Deemed retirement from a Provident Fund Par4(3) of the 2nd Schedule:

  Fund administrators must note that the reason “Provident Fund deemed retirement” cannot be used if the date of accrual is on or after 1 March 2023.

  Paragraph 2(1)(c) of the Second Schedule:

  A retirement benefit, in respect of a member who has reached retirement age, that was transferred to a Preservation Fund, cannot be accessed as a once-off withdrawal benefit, prior to retirement.

  Recognition of Transfer

  To assist the Fund Administrators / Long-Term Insurers to understand the Recognition of Transfer (ROT) decline reasons, SARS has enhanced the response messages to be more meaningful to ensure that the recipients understand what needs to be corrected before attempting to resubmit the ROT.

  Fund administrators / Long-term Insurers are reminded that when a retirement benefit is successfully transferred or there was a purchase of annuity on retirement, the receiving fund / Long-term Insurer must, submit a ROT to SARS. This is to confirm that the member’s benefit, as indicated on the tax directive, was received. SARS sends a notification to the receiving fund if the ROT has not been submitted to SARS after 21 working days. Where an ROT remains outstanding after 21 working days, the taxpayer will receive a notification. Should the ROT not be received from either the fund or the taxpayer after 21 working days may result in the taxpayer’s return being rejected and the transfer / POA will be treated as a withdrawal benefit and will be subject to tax as such.  

• 24 August 2023 – Interface specification version 6.504 trade testing dates and software implementation

  SARS will introduce enhancements to the Tax Directives process as indicated in the IBIR-006 Tax Directives Interface Specification Version 6.503.  The trade testing dates were confirmed for the implementation of the software is planned for implementation in the first quarter for the 2023/2024 financial year.  You have received communication with regards to the exact dates for trade and the implementation dates.

  There were changes effected as per the feedback from the testing team with regards to Form C, where for a transfer value less than R371250, the full benefit must be transferred, i.e., the “original fund” must be zero.

  The changes are thus reflected on IBIR-006 Tax Directives Interface Specification Version 6.504.

  The Tax Directives Interface Specification is available on the SARS website www.sars.gov.za  and you are encouraged to review it prior to testing.  

  Please follow these steps to submit test files:

  Step 1: Before testing can commence, you will need to email 10 taxpayer reference numbers to [email protected]  to ensure the numbers are active.  In the email subject line, use “Tax reference numbers for Trade Testing”. A maximum of 10 taxpayer reference numbers will be allowed.

  Step 2: You will be notified via the same email address to confirm when testing may commence.

  For trade testing queries please email [email protected]

• 24 July 2023 – Trade testing for Tax Directives starts 16 August 2023
  
  SARS will introduce enhancements to the Tax Directives process as indicated in the IBIR‐006 Tax Directives Interface Specification Version 6.503. Trade testing is planned to start on Wednesday, 16 August 2023 to prepare for the implementation of the software during the second quarter of this financial year. If the dates need to change, SARS will communicate accordingly.

  Keep an eye on this webpage and the Independent Software Vendors webpage.

  Please follow these steps to submit test files:
  
  Step 1:
  Before testing can commence, you will need to email 10 taxpayer reference numbers to [email protected] to ensure the numbers are active. In the email subject line, use “Tax reference numbers for Trade Testing”. A maximum of 10 taxpayer reference numbers will be allowed.
  
  Step 2:
  You will be notified via the same email address to confirm when testing may commence.

  For trade testing queries please email [email protected].

• 29 March 2023 – Interface specification version 6.503:  Implementation date rescheduling
  
  

  SARS has previously published a notice titled, Tax Directives:  Interface specification version 6.503 trade testing dates and software implementation, with a planned execution date for the first quarter of 2023.

  Please be advised that the above implementation has been rescheduled for implementation in the second quarter of 2023. A date will be communicated for trade testing in due course.

• 27 March 2023 – FAQs on Employees’ tax (PAYE) on your pension or annuity for the tax period 1 March 2023 to 29 February 2024
  Click here to view the latest FAQs.
  
  
• 22 March 2023 – Employees’ tax (PAYE) on your pension or annuity for the tax period 1 March 2023 to 29 February 2024
  
  

  Where a pensioner has one source of income during a tax year, our employees’ tax (PAYE) deduction system ensures the correct PAYE deductions from a pension.

  However, where a pensioner is in receipt of more than one source of income, the different sources of income are combined at the end of the tax year to determine the correct amount of tax due. The sum of the income typically places the taxpayer into a higher tax bracket, which normally creates tax due to SARS at year-end. 

  This is not a new principle and it applies to everyone, not only pensioners.

  As a service to pensioners with more than one source of income, legislation makes provision for SARS to determine a more accurate monthly PAYE deduction tax rate. We do this by using the latest data available to SARS and issuing that PAYE tax rate to your pension administrator.  We refer to this as a fixed PAYE deduction rate.  Your pension administrator will then deduct a more accurate amount of PAYE from your pension. The aim of the more accurate fixed PAYE deduction rate is to ensure that you are not faced with a significant tax debt to SARS at year end.

  That said, it is ultimately your decision whether to make use of this service.  If, for example, you are already saving towards a tax debt at year end, then you may wish to opt out of this service. You can opt out of this service by informing your pension administrator of your choice to opt out. If you opted-out in the previous tax year, your choice will remain unless you inform your pension administrator in writing that you wish to participate in this service.  For more detail click here.

• 6 March 2023 – Amendment to Section 1.1, Paragraph (b) (xii)(bb) of the definition of “retirement annuity fund” in section 1(1) of the Income Tax Act
   
  

  Section 1.1, Paragraph (b) (xii)(bb) of the definition of “retirement annuity fund” in section 1(1) of the Income Tax Act has been amended to allow for transfers between Retirement Annuity Funds (RAF).

  The effect of the amendment is that the word “total” is deleted, and the following conditions are inserted –

  • The value of each policy/contract being transferred from one retirement annuity fund to another retirement annuity fund must exceed R371 250 (see highlighted portion blue above); and
  • The value remaining in the retirement annuity fund after the transfer must exceed R371 250.

  However, there is no monetary restriction on the transfer value if the full/total value of the retirement annuity fund is transferred to another retirement annuity fund (i.e., there is no amount remaining in the retirement annuity fund after the transfer).

  Where a taxpayer opts to transfer one or more policies/contracts to a new RAF you are requested to complete a separate tax directive application for each transfer. You will be advised when a single tax directive application can be submitted for all policies for which the transfer is being completed for.

• 3 March 2023 – Interface specification version 6.503 trade testing dates and software implementation
  
  

  SARS will introduce enhancements to the Tax Directives process as indicated in the IBIR-006 Tax Directives Interface Specification Version 6.503.  The trade testing dates are still to be confirmed and the implementation of the software is planned for the first quarter of the 2023/2024 financial year.  You will receive communication with regards to the exact dates for trade testing and the implementation date close to the time.

  The Tax Directives Interface Specification is available on the SARS website www.sars.gov.za  and you are encouraged to review it prior to testing.  

  Please follow these steps to submit test files:

  Step 1: Before testing can commence, you will need to email 10 taxpayer reference numbers to [email protected]  to ensure the numbers are active.  In the email subject line, use “Tax reference numbers for Trade Testing”. A maximum of 10 taxpayer reference numbers will be allowed.

  Step 2: You will be notified via the same email address to confirm when testing may commence.

  For trade testing queries please email [email protected].

• 12 December 2022 – Trade testing dates and software implementation

SARS will introduce enhancements to the Tax Directives process as indicated in the IBIR-006 Tax Directives Interface Specification Version 6.501. The trade testing dates are still to be confirmed and the implementation of the software is planned for implementation in April 2023. You will receive communication with regards to the exact dates for trade testing and the implementation date closer to the time.

The Tax Directives Interface Specification is available on the SARS website www.sars.gov.za and you are encouraged to review it prior to testing.

Please follow these steps to submit test files:

Step 1:  Before testing can commence, you will need to email 10 taxpayer reference numbers to [email protected] to ensure the numbers are active. In the email subject line, use “Tax reference numbers for Trade Testing”. A maximum of 10 taxpayer reference numbers will be allowed.
Step 2:  You will be notified via the same email address to confirm when testing may commence.

For trade testing queries please email [email protected]

• 9 December 2022 – Implementation of Tax Directive system enhancements scheduled for 9 December 2022

The South African Revenue Service (SARS) has implemented enhancements to the Tax Directives system in line with the introduction of Par 2(2B) of the Fourth Schedule which requires that employees’ tax to be calculated and withheld at a fixed tax rate from an annuity. Read more.

• 7 December 2022 – Implementation of Tax Directive system enhancements scheduled for 9 December 2022

The introduction of Par 2(2B) of the Fourth Schedule requires that employees’ tax be calculated and withheld at a fixed tax rate from an annuity, if a taxpayer receives remuneration from more than one source during a year of assessment and where one or more of those sources is from an employer who is a retirement fund or is licensed as an insurer under the Insurance Act.

These employers are required to apply the fixed tax rates prescribed and made available on e@syFile™ Employer or eFiling by SARS. The policy intention aims to ensure that the monthly employees’ tax is calculated correctly so that the taxpayer does not have a substantial tax shortfall due by you to SARS or due to you by SARS on assessment. These tax rates are calculated using prevailing tax rates and information pertaining to the taxpayer at the time of processing. For more information click here.

• 10 October 2022 – Update on Tax Directives enhancements in line with Financial Sector Conduct Authority (FSCA) were implemented
  
  

  The South African Revenue Service (SARS) implemented enhancements to the Tax Directives process on 16 September 2022 by validating the name of the fund at Financial Sector Conduct Authority (FSCA) as well as the number with the FSCA database.

  Where Funds and Fund Administrators experience spelling errors between information on the FSCA website that is not aligned with your FSCA registration letter, a request to correct the spelling error must be sent to the following contact person: Jodine Scholts at [email protected] at the FSCA. Please note that this email address is only for the correction of spelling errors of names.

  All other issues relating to the FSCA, must be directly addressed with the FSCA via the existing channels available to the Funds and Fund Administrators.

  You are advised to continue using the name exactly as it is listed on the FSCA website until the changes on the name have been effected to avoid a rejection of the directive application.

• 16 September 2022 – Tax Directives enhancements in line with Financial Sector Conduct Authority (FSCA) were implemented
  
  SARS has successfully implemented enhancements to the Tax Directives validation process.

  Please note that going forward, SARS will be validating the registration data and status of entities submitting Tax Directive applications with the Financial Sector Conduct Authority (FSCA). Due to the additional control measures, some applications will inevitably be declined due to failed validations if the data that is captured is not aligned with the information on the FSCA website.

  Fund Administrators and Long-term Insurers are encouraged to ensure that the registration data (Name of the fund, name of participating employer, name of Long-term Insurer and the registered number) captured on the tax directive application is correct and corresponds with the registration data on the FSCA records.

  In the unfortunate event that the tax directive application is declined due to incorrect data captured, kindly ensure that the registration data with the FSCA is used and resubmit tax directive application.

  The following Guides were updated:

  • IT-AE-33-G01 – Tax Directive for Emigration, Cease to be resident and Expiry of visas – External Guide
  • IT-AE-41-G02 – Guide to Complete the Tax Directive Application Forms – External Guide
  • IT-AE-41-G03 – Guide to Complete Submit and Cancel a Recognition of Transfer – External Guide
• 12 September 2022 – Tax Directive Software Implementation
  

  The South African Revenue Service (SARS) will introduce enhancements to the Tax Directives process as indicated in the communication published on 20 July 2022.  The planned implementation date is scheduled for 16 September 2022, you will be notified should this date change.

• 16 August 2022 – Tax Directive Enhancements for September 2022
  Following previous communication, that the South African Revenue Services will be validating the registration data and status of entities submitting Tax Directive applications with the information captured on the Financial Sector Conduct Authority (FSCA) database, please note that some applications will inevitably be declined because of validations failing where the data is not aligned to the data on FSCA records.  For more information click here.
  
  
  
• 25 July 2022 – Emigration withdrawal changes
  

The tax directive system currently includes a validation that results in tax directive applications, with the ‘Emigration withdrawal’ reason where the date of accrual is on or after 1 March 2022, being rejected.  The tax directive validation has been subsequently removed. This means that the accrual date for tax directive applications with the reason ‘Emigration withdrawal’ can be a date after 1 March 2022 but the following supporting documents must be attached to the tax directive application submitted through eFiling to prevent the tax directive being rejected:

• • The emigration application (MP336(b)) with a date stamp before 1 March 2021; and
  • The letter issued by the Authorised dealer must indicate that the emigration is recognised for purposes of exchange control before 1 March 2022 (SARB Approval date).

The Tax Directive Guides have been updated with the information:

• • IT-AE-41-G02 – Guide to Complete the Tax Directive Application Forms – External Guide
  • IT-AE-33-G01 – Tax Directive for Emigration, Cease to be resident and Expiry of visas – External Guide
    
    
• 20 July 2022 – Tax Directive Enhancements for September 2022

SARS will be enhancing the Tax Directive Process. This enhancement entails the validation of specific data captured on the tax directive application form against the information held by the Financial Sector Conduct Authority (FSCA).

The changes will impact only the back-end processes of SARS; there will be no changes made to the IBIR-006 Tax Directives Interface Specification.
The following data will be validated against the Funds’ information as registered with the FSCA:

• the registered fund name;
• participating employer name; and
• FSCA registration numbers (participating employer number included) should be captured as it is on the FSCA data base.

Data captured on the tax directive application must correspond with the registration data with the FSCA. Incorrect data or omitted data will result in the tax directive applications being declined.  

• • A new reason has been added on the IRP3a to cater for foreign companies that are not registered for Pay As You Earn 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 on the ITR12 to cater for payments made by foreign entities. The taxpayer/Tax practitioner must select <Y>
    • This will open a container whereby <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.

       

• 25 April 2022 – Legislative changes to the Tax Directives process have been implemented.
  
  The following information is important for Fund Administrators, Insurers, Tax Practitioners, Advisors and taxpayers.

  • Taxpayers who are members of a pension preservation or provident preservation fund, 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 tax neutral on a Form A&D – reason Transfer before Retirement [par 2(1)(c)]
  • • • Taxpayers can now, on retirement, elect to use two thirds (⅔) or more of the total value of the retirement interest in the fund to provide a pension and / or annuity or purchase a living annuity and / or a guaranteed annuity from an Insurer. Alternatively, they can elect to keep a portion of the retirement interest in the fund which will provide a pension and / or annuity and use a portion to purchase a living annuity and / or a guaranteed annuity from an Insurer. However, it is important to note that the condition placed on a purchase of an annuity is that the value of each annuity (living and / or guaranteed and / or remaining in the fund) must be R165 000 and above, respectively. 
• 18 January 2022 – Tax Deductions (PAYE) on your Pension or Annuity
  

  To assist pensioners with more than one source of income, recently introduced legislation makes provision for SARS to determine a more accurate PAYE deduction amount. We do this by using the latest data available to SARS.  Your retirement fund administrator will then deduct a more accurate amount of PAYE from your pensions or annuities. It is our intention to introduce this service with effect from 1 March 2022. Your retirement fund administrator is already aware of all the above. For more detail, click here.

• 6 December 2021 – Tax Directive Enhancements
  

  Enhancements were implemented to the Tax Directives system in line with the IBIR-006 -Tax Directive Interface Specification:  

  In cases where a pensioner has one source of income during a tax year, our PAYE system typically ensures that the tax due at year-end is sufficiently covered by way of monthly PAYE withholdings. However, where a pensioner is in receipt of more than one source of income, a tax debt may arise at year-end when we combine all the sources of income together for purposes of determining taxable income and tax due.

  While the PAYE system permits a pensioner to request that a higher amount of PAYE be deducted so that any tax due at year-end is adequately covered, not many pensioners are making use of this option, which then leaves them with a tax debt at year-end, which they did not budget for. In turn, this has a significant negative impact on the outstanding debt book of SARS.

  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, with reference to the latest data available to SARS, and to provide that rate to the retirement fund administrators for purposes of withholding PAYE.

  It is the intention to introduce this service with effect from 1 March 2022.

  In practice, this will mean the following:

  1. Prior to 1 March 2022, SARS will, where it deems necessary, provide retirement fund administrators with the PAYE withholding percentage for each of the pensioners on its payroll that qualify;
     
     
  2. This means that retirement fund administrators will be required to use the rate provided by SARS in respect of remuneration paid or payable with effect from 1 March 2022;
     
     
  3. SARS will provide the PAYE withholding rates by way of an electronic file in CSV format. This file will be issued via e@syFile™;
     
     
  4. Where a PAYE withholding rate has not been provided by SARS in respect of a particular pensioner, retirement fund administrators must continue to apply the normal PAYE withholding rates;
     
     
  5. Where SARS provides a PAYE withholding rate, it will be by way of an annual directive. Where a pensioner’s circumstances change during the year (for example other employment income ceases, or death and so on), the retirement fund administrator may apply the normal PAYE withholding rate as opposed to the withholding rate provide by SARS with effect from the month in which the it becomes aware of the change of circumstances;

  6. Notwithstanding the PAYE withholding rate provided by SARS, a pensioner may at any time, request his or her retirement fund administrator to withhold PAYE at a rate higher than the rate provided by SARS. The Voluntary over deduction indicator in the code 3195 field on the IRP5/IT3(a) certificate must be set to “Y” for yes, if applicable, as per the normal procedure; otherwise it must be “N” for no – this field is mandatory from the 2020 year of assessment. However, all PAYE amounts withheld and paid over to SARS must be declared under code 4102 on the IRP5/IT3(a), including any voluntary over-deducted amounts.

  7. Notwithstanding the PAYE withholding rate provided by SARS, a pensioner may request his or her retirement fund administrator to withhold PAYE at a rate that is equal to the PAYE withholding rate under the normal PAYE withholding tables. In such a case, the retirement fund administrator is required to inform the pensioner of the possibility that the PAYE withholding rate will be insufficient to cover the tax liability of the taxpayer on assessment;

  8. The rates of PAYE withholding provided by SARS apply in respect of the following source codes only:
     a. 3603 – Pension
     b. 3610 – Annuity from a Retirement Annuity Fund
     c. 3611 – Purchased Annuity
     d. 3618 – Annuity from a Provident Fund or a Provident Preservation Fund.