SARS Processes R4.1bn in Tax Directives from Two Pot System Withdrawals

In an impressive logistical feat, the South African Revenue Service (SARS) has swiftly acted on a deluge of tax directive applications associated with withdrawals from the newly implemented two pot system. Since the inception of the system earlier this month, the revenue service has processed applications to the value of R4.1 billion.

Statistics show that a vast majority, amounting to 159,853 of these applications, relate specifically to Savings Withdrawal Benefits. This figure represents a substantial 98.9% of the total applications received between the 1st and 10th of September 2024. To put in perspective, SARS efficiently handled an average of nearly 18,000 tax directive applications per day.

SARS Commissioner Edward Kieswetter has enlightened the public on the nuances of the fund withdrawal process, emphasizing the fiscal responsibility interwoven with payouts. Traditionally, contributions to a pension or retirement fund are tax-deferred until the individual retires, at which point the funds are taxed at a reduced rate. However, should a withdrawal occur before retirement, the funds are subject to tax at the individual's marginal rate.

Fund administrators are tasked with submitting applications for tax directives through SARS eFiling. These directives serve as an official indication on how much tax must be withheld by the fund before disbursements to members. Commissioner Kieswetter points out that any outstanding tax debt to SARS will be considered during this transaction, either being added to the withdrawal tax or deducted as per existing payment agreements.

Kieswetter also took the opportunity to highlight the efficiency of the SARS team by noting that the directive applications are usually completed without the need for human intervention within 24 hours – a testament to the robust automation in place.

For those seeking additional information regarding the new two pot system and its implications for their finances, SARS has made resources available. Taxpayers have access to the SARS Online Query System and can use the SARS WhatsApp channel at 0800 11 7277 for simulated tax calculations on their potential withdrawals.

The reasons for withdrawal under this system vary, with top reasons including transfers due to divorce, transfers to a retirement fund, and direct withdrawals by taxpayers themselves. SARS promises to keep the public updated with regular reports as trends and numbers evolve in the use of this new fiscal facility.

Taxpayers across the country are navigating the new system, and with the proactive approach from SARS, guidance and clarity are being provided during a time of potentially significant financial changes for many.