The following is the News flash 2022-34 published by the PAGSA regarding SARS Notice Fixed Rate Directive rules

SARSNOTICE: FIXED RATE DIRECTIVE RULES AND INCORRECT FILE INFORMATION

SARS has released a notice with regards to the above.

The SARS notice follows below.

Dear Valued Stakeholder,

UPDATED PAR 2(2B) FIXED RATE DIRECTIVE RULES AND INCORRECT FILE INFORMATION

The South African Revenue Service (SARS) has revised the fixed rate directives issued under Par2(2B) of the Fourth Schedule to the Income Tax Act. The system has been updated with additional rules to ensure that the outcome targets the correct taxpayers and the correct fixed rates are prescribed.

Due to the updated rules that have been applied, some taxpayers may no longer meet the qualifying criteria for the issuing of a Par2(2B) fixed rate directive, resulting in a significant reduction in the number of impacted taxpayers compared to the last file issued.

The following qualifying criteria must be met for a taxpayer to qualify for inclusion in the fixed rate calculation under Par2(2B):

• Two or more retirement incomes with source codes 3603, 3610, 3611 and/or 3618
• If the taxpayer receives a remuneration e.g., salary source code 3601 with at least one retirement income.g., sourcecode 3603,3610,3611 and/or 3618
• If the sum of the remuneration exceeds the tax threshold.

Where the revised fixed rate directive file excludes the names of taxpayers included in the previous file, the administrator is required to revert to the PAYE rate—
• as per the PAYE deduction tables, or
• in terms of paragraph 2(2) of the Fourth schedule that is higher than the PAYE deduction tables.

However, where the revised fixed rate directive file prescribes a higher fixed PAYE rate than previously, the administrator must apply the higher fixed rate only from a current month and not backdated from 1 March/April 2022.

As advised in the latest directive letter, where the revised fixed rate directive file prescribes a lower fixed PAYE rate than previously, the administrator may reduce PAYE to be withheld for subsequent periods with amounts over-deducted in previous pay periods during the same year of assessment. The over-deduction in previous pay periods may be used to reduce the PAYE to be deducted in any of the subsequent pay periods.

In addition, we have noted and fixed the error which resulted in the taxpayer ID number and date of birth being incorrectly displayed. In this regard, the new files were already issued on 28 July 2022.

Issued on behalf of the Commissioner for the South African Revenue Service (SARS)