Two-pot payouts top R43bn – Sars

More than two million South Africans have applied to withdraw money from their savings components under the two-pot retirement system, with a staggering R43.4 billion paid out to date.

This was confirmed in a statement by the South African Revenue Service (Sars) late on Friday afternoon.

Listen: Two-pot withdrawals not moving the needle
Read: Two-pot: ‘Sars took it all’ say many claimants

Sars notes that it has so far received 2 664 279 applications for tax directives for withdrawals. Of the total number of applications, 2 403 379 tax directives were approved for funds to be released.

“The remainder were declined for a variety of reasons, including incorrect ID numbers and incorrect numbers.”

Tax directives and debt to Sars

After a registered taxpayer has applied for a withdrawal to its retirement fund, the fund requests a tax directive from Sars. A successful tax directive in turn informs the 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 any payout is made to the member. If a person has a debt arrangement with SARS, the withdrawal will not be affected,” Sars notes.

Read:
No tax registration, no two-pot withdrawal – Sars
Eye-watering taxes await those who withdraw funds under two-pot

Moneyweb reported earlier that many retirement fund members who opted to withdraw funds were disillusioned and unaware of the tax implications, notwithstanding extensive awareness campaigns.

A number of claimants also ended up with no payouts as a result of the higher tax rate combined with outstanding debt to the revenue service.

Misrepresentation

Withdrawals from the savings pot are taxed at the marginal tax rate ranging between 18% to 45% depending on taxpayers’ income scales.

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

“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.

Read: Two-pot withdrawals to top R5bn for state coffers
Listen: Tax implications of the two-pot system

“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. I wish to caution taxpayers to refrain from this unbecoming conduct that borders on criminality. There are real consequences for this behaviour.”

Follow Moneyweb’s in-depth finance and business news on WhatsApp here.