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Same as personal income living annuities are subject to PAYE. The onus is on your Annuity Provider to withhold tax on such income subject to your taxable income as prescribed in the tax relevant tables after taking relevant annual tax rebates into account…

Annuity providers used to withhold annuity tax under administration as if it were their clients’ sole source of income. Annuitants may however elect its providers to apply a higher tax rate to annuity income should they prefer to discharge tax from a different source of income. Some taxpayers may enjoy a reduced-rate SARS directive to deduct or benefit from a lower PAYE rate to accommodate circumstances of hardship outside the taxpayer’s control, or as a directive to avoid double taxation.

Effective 1 March 2022, based on a fixed-rate directive for discharge via its taxpayers’ Annuity Providers, taxpayers who enjoy annuity income from more than one source, or benefit from both a salary and annuity income may be affected by the this new tax regulation.

Why did SARS implement this regulation?

Simple. In taxpayer’s best interest to avoid instances where employers and Annuity Advisers are unaware of another; to prevent an over-deduction of PAYE from the taxpayers’ with more than one source of income; to legitimally optimise taxpayers’ income; and enjoy maximum benefit from allowed annual tax rebates as prescribed in SARS’ Personal Income Tax Table. In short: to help taxpayers to overpay in taxes.


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