The South African Revenue Service (SARS) has announced in the Budget Review that it is considering discon- tinuing its Standard Income Tax on Employees (SITE).
This doesn't mean you'll pay less tax. It will just be a change in the way the income tax is collected. SITE is the tax deduction system applied to your monthly pay if the annual equivalent of your income does not exceed R60 000.
Under this system, the amounts deducted for tax by your employer are the final amounts you will pay and you don't have to submit a tax return and have your tax liability assessed.
If you earn more than R60 000 a year, your tax is deducted in terms of the Pay As You Earn (PAYE) system and you do have to submit a tax return.
However, the level below which you do not pay tax - the tax threshold - is getting very close to the SITE ceiling, and SARS believes it may no longer require the SITE system.
Fewer tax returns
Other reasons why the SITE system is becoming redundant are that tax returns now already contain your wage- or salary-related details, and SARS no longer requires taxpayers earning below a certain amount from a single employer to submit a tax return.
For the 2007/8 tax year, taxpayers earning less than R120 000 from a single employer did not have to submit a tax return.
Franz Tomasek, the general manager for legislation at SARS, says the scrapping of SITE will have no effect on most tax-payers, but it could affect those who earn less than R60 000 a year from more than one employer. Because of the way the system works, they may currently be enjoying higher tax rebates than they should. This is because each employer may be applying the tax rebate when calculating how much tax to deduct.
Should SITE be scrapped these taxpayers may find that they will be required to submit a tax return and will owe more tax.