The South African Revenue Service (SARS) says online requests for tax directives on lump sums paid from retirement funds at retirement or on death will again be processed within 48 hours from November 5.
Edward Keiswaetter, the chief operations officer of SARS, says since October 1, when the taxation of retirement fund lump sums changed, SARS has had to process manually requests for directives on how much tax must be deducted from lump sums paid to members.
This has been taking 14 or 15 days, he says, but computer systems are expected to be updated for the new tax system by November 5.
Keiswaetter says legislators decided to give taxpayers the benefit of the tax reductions on lump sums as soon as possible and so the tax law changes were made effective from October 1 despite only being promulgated in August. The short lead-in time did not give SARS enough time to update its computer systems before October 1, he says.
The tax legislation was amended to reflect that from October 1 the first R300 000 of the lump sum you withdraw at retirement is tax-free. The next R300 000 you withdraw is taxed at 18 percent and the next R300 000 at 27 percent. Anything over R900 000 that you withdraw is taxed at 36 percent.