Gallo Images/Fani Mahuntsi
The South African Revenue Service (SARS) has said two-pot claims have risen to around R4 billion in just over a week.
With South Africans eager to withdraw from their retirement savings, SARS said it received 161 607 tax directive applications from retirement fund administrators between 1 September and 10 September, meaning that it had to process nearly 18 000 tax directive applications a day.
A tax directive allows SARS to instruct an employer, fund administrator or insurer how to deduct tax from lump sum payments to a taxpayer or member.
The gross amount of the lump sums for the applications came to R4.1 billion, SARS said. Of the tax directive applications, more than 98% had been for savings component withdrawals.
Under the two-pot system, South Africans can withdraw 10% of their previous retirement savings from their savings component, capped at R30 000. These withdrawal amounts are taxed at a marginal rate based on income bracket.
This week, SA’s largest retirement fund administrator, Alexforbes, said it had processed 78 000 withdrawals – worth around R1.5 billion – from its clients in the space of a week. Of this amount, R270 million was paid for taxes.
READ | UPDATE | Two-pot frenzy: Alexforbes processes withdrawals worth R1.5bn in a week
In a statement, SARS Commissioner Edward Kieswetter said: “Taxpayers who owe SARS money must realise that this tax debt will be added to the tax on withdrawal from the savings benefit. But if payment arrangements are in place to settle the debt with SARS, this debt will be deducted as per agreement between SARS and the taxpayer.”
He said that turnaround time for directive applications is 24 hours.
