South Revenue Service (Sars) has to date received more than 1.2 million applications for tax directives for withdrawals from the Savings Withdrawal Benefit of the two-pot system.
Of the 1,213,646 total applications, 1,148,729 tax directives were approved for funds to be released.
A total gross lump sum of R21.4 billion has been paid out to date.
The remainder were declined for a variety of reasons including incorrect Identity Numbers, incorrect tax numbers, among others, Sars said.
“SARS reminds taxpayers who want to apply for a withdrawal to make sure that they verify their tax numbers, have supplied the correct Identity Numbers and that they do not have any outstanding debt with SARS,” Sars said.
“After a registered taxpayer has applied, a successful tax directive informs the fund management how much tax to deduct from a withdrawal.
Directive applications are accepted by SARS 24/7 and processed within an hour 365 days a year from 8am to 7pm.
“Unless a directive application is submitted outside of these hours, the response if the taxpayer is compliant will be sent to the fund within an hour.”
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. If there is a debt owed to SARS, it will be deducted in terms of such arrangement,” Sars said.
Taxpayers were also reminded that tax will be imposed on a withdrawal at a marginal tax rate ranging between 18%-45% depending on their scales.
Sars noted that there were taxpayers wilfully understating their incomes.
SARS Commissioner Edward Kieswetter said: “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.
“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 conduct that borders on criminality as there are real consequences for this behaviour”.
For more information from SARS about the two pot system contact the SARS Online Query System on the SARS website and the SARS WhatsApp channel – 0800 11 7277 where taxpayers can do simulated tax calculations on their two pot withdrawals.
Cape Times