They say that the only thing certain in life is death and taxes. One of the positives of attaining the ripe old age of 65 is that one should end up paying a little less in taxes than ones younger counterparts. The tax threshold for a person aged 65 year
At the age of 65, most people would already have retired and ideally would be enjoying life away from the hustle and bustle of work and the stress of sitting in the traffic. It is not uncommon however for individuals who are retired, to return to work on a fixed-term contract. These individuals would continue to earn remuneration for the services being rendered and should be paying less tax on the same income on a monthly basis than when he/she was 64... or not!
The legislation is clear. Individuals who attain the age of 65 and 75 are entitled to a secondary and tertiary rebate respectively on any income that they earn. It would stand to reason that these additional rebates would be taken into account when calculating the take-home remuneration of a person on a monthly basis (via the payroll). Interestingly, some payroll software do not automatically allow the secondary and tertiary rebate if the individual concerned does not provide the employer with a letter declaring their age. Shock...horror...why are they doing this? Well, they are simply acting on instruction from SARS. According to the Income Tax Act and the ”Guide for Employers in respect of Employees’ Tax” issued by SARS, employers may allow the secondary rebate only once the individual has provided their employer with a written declaration of age (age letter).
This is a rather strange request bearing in mind that the employees South African ID number is one of the mandatory fields in the IRP 5 certificate. It would therefore be easy to work out the age of the individual based on the ID number of the individual e.g. 4511150764081 means that the person was born in 1945 is over 66 years old now in 2012. Not quite rocket science. The need for a letter then indicating the individuals age seems unnecessary and the person concerned may probably be screaming “Red tape!”.
Unfortunately, when looking at payroll systems such as SAP, the process of allowing the secondary and tertiary rebate is a manual one. In accordance with SARS instruction, a “tick” is required indicating that an age letter has been provided prior to the system allowing the secondary rebate. Worse still, is the fact that the payroll administrator will need to keep track of all employees nearing the age of 65, to be able to request the “age letter”. With a large employee population, this is near impossible.
There is a possibility that SARS is benefitting from individuals 65 years and older who do not file a tax return but are entitled to a refund because they were not notified of the need to provide an “age letter”. So, at the end of the day, on your 65th birthday, you should be entitled to more rebates from SARS but likelihood of you receiving it in relation to your monthly remuneration is slim....if you haven’t provide the letter. So, tip for the Minister, get rid of the red tape and let the aged get what they are entitled to by law!
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