SA’s tax authority has so far approved 1.1-million applications for tax directives for withdrawals under the two-pot system of retirement which took effect on September 1.
The SA Revenue Service (Sars) also announced in a statement on Friday that a total gross lump sum of R21.4bn had been paid out to date but did not disclose the tax revenue generated on this payout. The National Treasury has estimated that R5bn in tax revenue could be derived in 2024/25 from withdrawals under the new pensions regime.
Estimates of total withdrawals for this year range from R20bn-R100bn, which is expected to give a boost to economic growth as well as tax revenue.
On implementation of the two pot system, the lower amount between 10% of the accumulated pension savings and R30,000 was transferred into a savings pot and became immediately available for withdrawal.
Of the total number of 1,213,646 applications received so far 1,148,729 tax directives were approved by Sars for funds to be released. The remainder were declined for a variety of reasons, including incorrect identity numbers and incorrect tax numbers, among others.
Tax on a withdrawal is imposed at a marginal tax rate of 18%-45%, depending on the salary scale of each recipient but Sars said despite this public information, there were taxpayers who are “wilfully understating their incomes”.
Sars said it was concerned that 213,654 taxpayers with incorrect taxable income had been picked up. These incorrect figures were put in so as to get a more favourable tax rate, Sars commissioner Edward Kieswetter said.
“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,” Kieswetter said.
“I wish to caution taxpayers to refrain from this conduct that borders on criminality as there are real consequences for this behaviour.”
A successful tax directive from Sars informs the retirement fund management how much tax to deduct from a withdrawal. Before a final amount is paid to the applicant, the pension fund will be informed to also deduct any outstanding debt on behalf of Sars before a payout is made to the member.
If a person has a debt arrangement with Sars, the withdrawal will not be affected. However, if there is a debt owed to Sars, it will be deducted.
Sars said it accepted directive applications 24/7 and processed them within an hour 365 days a year from 8am to 7pm. Unless a directive application was submitted outside of these hours, the response if the taxpayer was compliant would be sent to the fund within an hour.
The Sars simulated WhatsApp calculator has been used 51,547 times since implementation of the process. The simulated calculator on the Sars website has been used 655,801 times. Sars has also received 53,519 queries through the voice channel and 8,655 at branches.
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