By Liesl Peyper.
The South African Revenue Service (Sars) has received altogether 161 607 tax directive applications since the two-pot retirement system came into effect on 1 September, it announced in a media statement on Wednesday.
The gross amount of the lump sums for the applications received totals R4.1 billion.
“A total of 159 853 of the directives relates to savings withdrawal benefits from the savings pot, which is 98.9% of the total number of applications received from Sunday 1 to 10 September 2024, which means Sars received an average of 17 964 tax directive applications a day,” Sars notes.
In the two-pot system, a third of pension fund members’ retirement savings are now allocated to a savings component, and two thirds of their contributions are allocated to a retirement component.
Sars Commissioner Edward Kieswetter says contributions made to a pension or retirement fund were not taxed at the time of payment to the fund but deferred to when the person retires and then taxed at a reduced rate.
“However, when an individual withdraws now, they will be taxed at their marginal tax rate.”
Applications for tax directives are submitted to Sars by a member’s pension fund administrator via eFiling. The directive indicates to the fund how much tax should be withheld on behalf of Sars before payout.
“Taxpayers who owe Sars money must realise that this tax debt will be added to the tax on withdrawal from the savings benefit,” Kieswetter points out.
However, if there are payment arrangements in place to settle the debt with Sars, this debt will be deducted as per the agreement between Sars and the taxpayer. A tax debt that has been deferred will also not be deducted.
The turnaround time for Sars to complete directive applications without human intervention is 48 hours.
According to Sars, the three main reasons given for withdrawals are:
- A transfer due to divorce;
- A transfer to a retirement fund; and
- A withdrawal by the taxpayer.
As the situation changes daily, Sars will provide periodic updates on withdrawal statistics, it notes.
Meanwhile, Alexforbes said in a separate statement earlier that it received 78 000 claims in the first week since the two-pot system took effect, and these are currently being processed. The 78 000 is equivalent to the number of claims it processed over a six-month period before the new legislation came into effect.
According to Alexforbes, the total value of claims currently being processed stands at R1.5 billion. It estimates that at least R270 million will be paid in taxes.
Sanlam Corporate noted earlier that it had processed more than 20 000 claims relating to the savings component in just the first two working days of September. This far exceeded the monthly average of 7 000 to 8 000 claims.
Taxpayers may get information from Sars about the new system through the online query system on the Sars website and the Sars WhatsApp channel on 0800 11 7277. Taxpayers can also do simulated tax calculations on their two-pot withdrawals on these two channels.