Cape Town – The South African Revenue Service (SARS) has disbursed approximately R21.4 billion to taxpayers who applied for the Savings Withdrawals Benefit under the two-pot retirement system.
The two-pot retirement system is a framework introduced by the South African government to reform the retirement savings landscape.
It allows members to manage their retirement funds more flexibly and access their savings under specific conditions.
- Pot 1 (Retirement Pot): This is the portion of savings meant for retirement. Funds in this pot are typically preserved until the member reaches retirement age, ensuring that individuals have sufficient savings to rely on during their retirement years.
- Pot 2 (Withdrawal Pot): This pot allows members to access a portion of their retirement savings before retirement. It is designed to provide more immediate financial relief for unexpected expenses, such as emergencies or financial hardships. Members can withdraw a certain percentage from this pot without significant penalties.
Over 1.2 million South Africans applied for the Savings Withdrawals Benefit, with about 1.14 million approvals, while others were declined due to errors in identity or tax numbers, the revenue service said.
SARS emphasised the importance of verifying tax information and ensuring there are no outstanding debts. Withdrawals are subject to tax rates ranging from 18% to 45%, depending on the amount.
“SARS reminds taxpayers, who want to apply for a withdrawal to make sure that they verify their tax numbers, have supplied the correct identity numbers, and that they do not have any outstanding debt with SARS.
“After 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 8am to 7pm. Unless a directive application is submitted outside of these hours, the response if the taxpayer is compliant be sent to the fund within an hour,” the revenue service said.
SARS Commissioner Edward Kieswetter expressed concern over 213,654 taxpayers who have incorrectly reported their income to evade higher tax rates, warning of penalties for such actions.
“SARS is deeply concerned that 213 654 taxpayers have been identified, where they have declared incorrect taxable income, with the view to have a more favourable tax rate.
“If a taxpayer understates their income, they are intentionally involved in evading their tax obligation. A penalty will be imposed on taxpayers who have understated income. Finally, I wish to caution taxpayers to refrain from this conduct that borders on criminality as there are real consequences for this behaviour,” Kieswetter said.
Additionally, SARS encourages the use of digital services, highlighting that its online tools have been widely utilised, reducing the need for in-person visits to offices.
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Compiled by Betha Madhomu
