Preservation Fund

Should I be owing SARS money if my employer deducts PAYE?

Question

I recently found out that I owe SARS R21,000. I was under the impression that as long as I am registered and my employer is deducting my tax, I am fine. I registered in 2005 and have never submitted a tax refund. I just don't understand how it can estimate this amount. I would like to know if SARS can deduct that amount from my provident fund when it pays out.

Answer

If your employer deducts PAYE correctly, you should not owe SARS any money. But you have no guarantee that your employer has not made a mistake. Also, there may be instances where your receive income in the form of an allowance, and you need to justify the allowance to SARS, to retain the tax benefit thereon. You would have to look at your assessments for the past few years, to see where the problem arose. It sounds like there were small annual discrepancies, that have been allowed to accumulate over many years. SARS cannot touch your money while it is in a retirement fund, but once you have cashed in, the cash received falls within your estate and could therefore be attached by SARS.

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