SARS Warns Against Tax Evasion as Billions Paid Out Under Two-Pot System
The South African Revenue Service (SARS) has successfully processed over 2.4 million tax directives for withdrawals under the new two-pot retirement system, resulting in a total payout of R43.42 billion. However, not all applications were successful—more than 260,000 were declined due to errors such as incorrect tax numbers or identity details.
Use Digital Tools for Faster Processing
SARS is urging taxpayers to make use of its digital channels to streamline the tax directive process. Instead of visiting SARS branches, taxpayers can use:
The online tax calculator (used over 952,000 times)
The WhatsApp simulated tax calculator (used over 90,000 times)
The SARS voice and branch query channels.
Applications for tax directives can be submitted 24/7, and SARS processes them daily from 08:00 to 19:00, with most approvals completed within one hour.
Warning: Taxpayers Who Underreport Income Will Face Penalties
A growing concern for SARS is the 213,654 taxpayers who misrepresented their taxable income to qualify for a lower tax rate on their withdrawal. SARS Commissioner Edward Kieswetter warned that this is a form of tax evasion, and those caught understating their income will face penalties.
“This is tax evasion, and there will be real consequences,” Kieswetter stated. Tax on these withdrawals is calculated at marginal tax rates ranging from 18% to 45%, depending on the taxpayer’s income bracket.
Key Takeaways for Accountants
Accountants should guide clients through this process by ensuring accurate applications, tax compliance, and awareness of deductions to prevent any unpleasant surprises.
Incorrect taxpayer information delays applications. Confirm that the correct tax numbers are used and identity details when applying for a withdrawal.
SARS automatically deducts any unpaid tax debts before releasing the final withdrawal amount. If a taxpayer has an active debt repayment arrangement with SARS, the withdrawal will not be affected.
SARS digital channels offer faster processing. Encourage clients to use SARS' online tools and WhatsApp calculator instead of visiting branches.
Underreported income will trigger SARS investigations. If a client has understated their income to lower their tax on withdrawals, they are at risk of penalties and legal consequences. SARS is actively tracking non-compliant taxpayers, and penalties will be imposed on those caught.
