An estimated 40 000 beneficiaries of the Government Employment Pensions Fund (GEPF) received sharply reduced income for October due to tax deductions as high as 60% in some cases.
An estimated 40 000 beneficiaries of the Government Employment Pensions Fund (GEPF) received sharply reduced income for October due to tax deductions as high as 60% in some cases.
The South African Revenue Service (Sars) insists that it explained the tax deduction to the GEPF, but the latter says the communication “could have been clearer”.
The two entities were meeting on Monday afternoon to discuss the deductions after the GEPF received numerous complaints and inquiries from its members.
A woman who receives a widow’s pension from the GEPF told the Mail & Guardian she had received only half of her usual income.
“I contacted the GEPF; they say it is a directive from Sars,” said the working pensioner, who receives a second income on which she also pays tax. “There has been no prior notification that this would happen.”
Sars implemented enhancements to its IBIR-006 Tax Directive Interface Specification in March 2022.
In December 2021, the tax agency said recently introduced legislation made provision for it 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 (pay as you earn)”.
It said the directive aimed to address the “tax debt” many pensioners earning more than one income experience at year-end.
Asked for clarity on the matter, Sars spokesperson Siphithi Sibeko confirmed to the M&G that “there is a directive but pensioners can opt out”. Sibeko said this “has been made clear to GEPF in order to explain to pensioners”.
But GEPF spokesperson Matau Molapo suggested the communication was not as clear as it should have been. Molapo said the GEPF had informed its members about the tax directive but added that “some might not have understood”.
Monday’s meeting will seek to determine whether any wrongful income tax deductions occurred.
The GEPF could not say how the affected pensioners would be reimbursed, should it be determined that income tax was indeed wrongfully deducted.