Before the writing of this article different tax rates were applied by South Africa Revenue Service (SARS) on annuitants with more than one annuity. This resulted in several tax rates being applied to the multiple annuities on a taxpayer. Moreover, this tax system created confusion and to a great extend reduced disposal incomes of most annuitants. With this tax system an annuitant could be owing SARS or vice versa, largely because of different SARS-Annuitant tax rates. Therefore, to curb this, SARS came up with an option whereupon a taxpayer can choose to apply a fixed tax rate across his/her annuities or stay the same.

The South Africa Revenue Service has introduced a change which will require a service provider (i.e., Allan Gray, Momentum, Glacier, etc) to withhold a SARS fixed tax rate higher than the rate based on the personal income tax tables. This change will come into effect on 1 March 2022 unless annuitant opt out. The change aims to reduce the tax liabilities that annuitants may face at the end of the tax year by instructing the service provider to apply a fixed rate of tax calculated by SARS to their income.

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