SARS Launches New Online Calculator for Two-Pot System Withdrawals
South Africa’s Revenue Service (SARS) has introduced an online calculator to help people understand the tax implications of the new two-pot retirement system.
This tool allows individuals to estimate how much tax they will owe when withdrawing from their savings pot.
The two-pot system, which started in September 2024, lets workers access part of their pension savings before retirement, but these withdrawals are taxable.
How Does The Two-pot System Work?
In the two-pot system, your pension contributions are split into two key parts: a retirement pot and a savings pot.
The retirement pot, holding two-thirds of your savings, cannot be touched until you retire. However, the savings pot allows withdrawals once per tax year, with a minimum of R2,000.
Any withdrawal is treated as regular income, meaning you will pay taxes based on your current income tax rate.
This system doesn’t include any tax-free amount for these early withdrawals.
How The Tax Collector Comes In
SARS will automatically deduct the tax when you make a withdrawal, and the amount you owe will depend on how much you earn and how much you withdraw.
If you owe money to SARS, such as unpaid taxes, they may also deduct this from your savings pot withdrawal.
Here’s a tip: It’s essential to understand that these withdrawals will reduce the money available for your retirement, so it’s important to think carefully before withdrawing.
