2-pot retirement system withdrawals hit R21b – SARS

The South African Revenue Service (SARS) has announced that a total gross lump sum of approximately R21.4b has been paid out to taxpayers who applied to utilise their ‘savings withdrawal benefit’ under the two-pot retirement system.

More than 1.2 million South Africans applied for the tax directive, with at least 1.14 million applications approved.

According to SARS, the remaining applications were ‘declined for a variety of reasons, including incorrect identity numbers and incorrect tax numbers, among others’.

SARS has reminded taxpayers wishing to apply for a withdrawal to ensure they verify their tax numbers, provide the correct identity numbers, and ensure they have no outstanding debt with SARS.

“Once a registered taxpayer has applied, a successful tax directive informs the fund management how much tax to deduct from a withdrawal. Directive applications are accepted by SARS 24/7 and processed within an hour, 365 days a year, from 08:00 to 19:00. If a directive application is submitted outside of these hours, the response, if the taxpayer is compliant, will be sent to the fund within an hour,” the revenue service explained.

Outstanding debt

SARS clarified that any debt owed to it by taxpayers may be deducted unless the taxpayer has a payment agreement in place.

“Before a final amount is paid to the applicant, the pension fund will be instructed to deduct any outstanding debt on behalf of SARS. If a taxpayer has a debt arrangement in place with SARS, the withdrawal will not be affected.

“If there is debt owed to SARS, it will be deducted in accordance with the arrangement,” SARS stated.

Additionally, tax is imposed on the withdrawal at rates ranging from 18% to 45%, depending on the taxpayer’s income bracket.

Tax obligation warning

SARS commissioner Edward Kieswetter warned that taxpayers who wilfully understate their income are attempting to evade their obligations to the revenue service.

“SARS is deeply concerned that 213 654 taxpayers have been identified as having declared incorrect taxable income in an attempt to obtain a more favourable tax rate.

“If a taxpayer understates their income, they are intentionally evading their tax obligation. A penalty will be imposed on those who have understated their income. I caution taxpayers to refrain from this behaviour, which borders on criminality, as there are real consequences,” Kieswetter said.

Avoid the queues

SARS also encourages taxpayers to use its digital services.

“In line with SARS’ strategy for taxpayers to use digital channels, we are pleased to report that the simulated WhatsApp calculator has been used 51 547 times since the implementation of the process.

“The simulated calculator on the SARS website, which forms part of the SARS Online Query System, has been used 655 801 times. SARS has also received 53 519 queries through the voice channel and 8 655 at branches.

“We encourage taxpayers to continue using digital channels, which are simple, easy, and user-friendly. Using these channels allows taxpayers to avoid queues at SARS offices,” the revenue service said. – SAnews.gov.za