SARS Issues Stern Warning Over Two-Pot Retirement System Underreporting
Over 200,000 taxpayers are underreporting their incomes when making withdrawals from the two-pot retirement system, according to the South African Revenue Service (SARS).
SARS Commissioner Edward Kieswetter expressed concern about the growing number of taxpayers who are misreporting their taxable incomes.
“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,” Kieswetter stated.
Despite public knowledge about the marginal tax rate applied to two-pot retirement withdrawals, many taxpayers continue to understate their incomes, SARS said. Kieswetter emphasised that such actions constitute intentional tax evasion.
“A penalty will be imposed on taxpayers who have understated income. Finally, I wish to caution taxpayers to refrain from this conduct that borders on criminality, as there are real consequences for this behaviour,” Kieswetter warned.
Additionally, fund members should be aware that any outstanding tax debt will be deducted from their two-pot retirement system withdrawals before any payment is made.
Nashalin Portrag, Head of FundsAtWork and Distribution at Momentum Corporate, also confirmed that SARS will subtract any overdue tax from the savings portion before releasing benefits.