For the first 10 days of September, the South African Revenue Service (Sars) has received closed to 18,000 tax directives relating to savings withdrawal benefits for the two-pot retirement system, according to the statement from Sars.
Sars said that from September 1 to 10, 2024, they received 159,853 two-pot retirement system tax directive applications which means that they received an average of 17,964 tax directive applications a day.
Overall, Sars received a total of 161,607 tax directive applications including tax directives that have been cancelled.
Gross amount of the lumpsums for the applications received totals R4.1 billion.
Media Release: Preliminary amount of R4.1bn applied for in two pot system
— SA Revenue Service (@sarstax) September 11, 2024
SARS has received a total 161,607 tax directive applications. This includes the directives which have been cancelled.... https://t.co/5fZ5hGtrY8 pic.twitter.com/hKjZfwSdc1
According to Sars Commissioner Edward Kieswetter, contributions made to pension or retirement funds are not taxed when they are paid to the funds but are deferred to the time the person retires and then taxed at a reduced rate.
However, when an individual withdraws from the savings pot of the two-pot retirement system they will be taxed at their marginal tax rate.
John-Paul Fraser, tax attorney, Tax Consulting SA said that this means that any withdrawal will be taxed in the same manner as a salary or other similar income.
Kieswetter said that fund administrators submit applications for tax directives to Sars via eFiling. The tax directive will indicate to the fund how much tax should be withheld by the fund 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 said.
“But if there are payment arrangements in place to settle the debt with Sars, this debt will be deducted as per agreement between Sars and the taxpayer. A tax debt that has been deferred will also not be deducted.”
The Sars commissioner said that the turn around time for Sars to complete tax directive applications without any human intervention is no more than 48 hours.
Taxpayers can get more information about SA’s new retirement system by the using the Sars Online Query System on the Sars website and the SARS WhatsApp channel 0800 11 7277.
Taxpayers can also find out what the possible withdraw amount from the two-pot retirement system by using the Sars two-pot retirement system calculator.
According to Sars, two-pot retirement system applicants can give three reasons why they want to make a withdrawal from the new system including: a transfer due to divorce, a transfer to a retirement fund and a withdrawal by the taxpayer.
Sars is also urging people to check to see if they are a registered taxpayers before the make a withdrawal from the two-pot retirement system.
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