The South African Revenue Service (SARS) has processed tax directive applications worth R4.1 billion for savings withdrawals under the newly introduced two-pot retirement system. As of 10 September 2024, SARS had received 161,607 tax directive applications, with 98.9% (159,853 applications) related specifically to savings withdrawal benefits.

This translates to an average of 17,964 applications per day since the system’s implementation on 1 September 2024.

SARS Commissioner Edward Kieswetter explained that contributions made to a pension or retirement fund are typically tax-deferred until retirement when they are taxed at a reduced rate. However, withdrawals made under the two-pot system are taxed at the individual’s marginal tax rate.

“Applications for tax directives are submitted to SARS by the fund administrator via eFiling, indicating how much tax the fund should withhold on behalf of SARS before payout,” Kieswetter said.

He also noted that taxpayers with outstanding tax debts should be aware that their debt will be added to the tax on their withdrawal unless payment arrangements are already in place with SARS.

SARS has streamlined its process, with tax directive applications being processed within 24 hours, often without human intervention. Taxpayers can access information through the SARS Online Query System or the SARS WhatsApp channel.

The primary reasons cited by applicants for making withdrawals include divorce-related transfers, transfers to other retirement funds, and direct withdrawals. SARS has committed to providing periodic updates on withdrawal figures as the situation evolves.