SARS Reports Two-Pot Payouts Surpass R43 Billion

Over two million South Africans have submitted applications to withdraw funds from their savings sections under the two-pot retirement framework, with an astounding R43.4 billion disbursed so far.

This was announced in a statement from the South African Revenue Service (Sars) on Friday afternoon.

Listen: Two-pot withdrawals not making a significant impact
Read: Two-pot: ‘Sars has taken everything’, claim many applicants

Sars indicates that it has received a total of 2,664,279 applications for tax directives to allow withdrawals. Out of these applications, 2,403,379 tax directives have been approved for fund releases.

“The remaining applications were rejected for various reasons, such as incorrect ID numbers and incorrect details,” Sars stated.

Tax directives and debts to Sars

Once a registered taxpayer seeks to withdraw from their retirement fund, the fund requests a tax directive from Sars. A successful tax directive subsequently informs the fund management of the tax amount to be deducted from the withdrawal.

“Before the final amount is issued to the applicant, the pension fund will also be notified to deduct any outstanding debts owed to Sars prior to any payout to the member. If an individual has a debt arrangement with Sars, this will not affect their withdrawal,” Sars highlights.

Read:
No tax registration, no two-pot withdrawal – Sars
And: Eye-watering taxes await those withdrawing funds under the two-pot scheme

Moneyweb previously reported that many retirement fund members choosing to withdraw were frustrated and unaware of the tax consequences, despite comprehensive awareness initiatives.

Some claimants ended up receiving no payouts due to the combination of high tax rates and outstanding debts to the tax authority.

Misrepresentation

Withdrawals from the savings pot are taxed at marginal rates ranging from 18% to 45%, based on the taxpayers’ income brackets.

However, a significant number of taxpayers are reported to “willfully understate their incomes,” according to Sars Commissioner Edward Kieswetter.

“Sars is deeply troubled that 213,654 taxpayers have been identified as having declared inaccurate taxable income to avail themselves of a more favorable tax rate.

Read: Two-pot withdrawals expected to contribute R5bn to state revenue
Listen: Tax implications of the two-pot system

“If a taxpayer understates their income, they are deliberately evading their tax responsibilities. Penalties will be enforced on taxpayers who underreport income. I urge taxpayers to avoid this unacceptable conduct, which may border on criminal activity. There are significant consequences for such actions.”

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