- 25 October 2024 – Updated Specification for the Two-Pot retirement system
Since the implementation of the Two-Pot Retirement System on 1 September 2024, SARS has noted the challenges that the industry has been experiencing. As such, another enhancement has been incorporated into IBIR-006 Tax Directives Interim Interface Specification Version 6.708. The enhancement and change inter alia will address additional validations for the de minimis (minimum amount that can be taken as cash) rule.
Currently, if a taxpayer has more than one policy with the same retirement annuity fund, to calculate the de minimis, the SARS system uses the value on the total gross benefit on the retirement amount but ignores any total benefit amounts from previous directives against the Financial Sector Conduct Authority number, registration number/approved fund number, for accruals from 1 October 2007.
To calculate de minimis, all corresponding component values in previous directives (accruals from 1 October 2007) against the same FSCA registration number/approved fund number, in respect of Form A&D, must be considered.
This has been corrected on Retirement Annuity Funds on Form C. The additional validations will apply to Form A&D for retirement or retirement due to ill health from a pension fund, provident fund or pension preservation fund.
- 27 September 2024 – Updated Specification for the Two-Pot retirement system
Since the implementation of the Two-Pot Retirement System on 1 September 2024, SARS has taken note of the challenges the industry is experiencing. To this end, various enhancements have been incorporated into IBIR-006 Tax Directives interim Interface Specification Version 6.707. These enhancements and changes inter alia include:
Enhancing system parameters to accommodate an annual saving withdrawal benefit from various contracts held with the same fund instead of declining such directives as duplicate directive applications.
Enhancing system parameters pertaining to the determination of annual income for the purposes of calculating tax on Savings Withdrawal Benefit directive applications
SARS has taken note of the fact that the annual remuneration has been underdeclared in some of the directive applications where the taxpayers are still employed, resulting in a nil or lower tax directive amount being issued. While there are valid instances where a zero declaration is correct, a nil or incorrect tax directive result will negatively impact these employed taxpayers resulting in the incurrence of a debt on assessment. SARS systems will therefore be enhanced to calculate the taxable amount based on information available to SARS and not necessarily on the annual remuneration value declared on the Savings Withdrawal Benefit directive application.
- 30 August 2024 – Updated Specification for the Two-Pot retirement system
As you are aware SARS has been making system enhancements to the Tax Directives process to accommodate the Two-Pot Retirement Scheme. While trade testing had already commenced on 1 July 2024, it should be noted that the trade testing has been extended to 30 August 2024 to allow for the testing of the latest changes that had been incorporated into IBIR-006 Tax Directives interim Interface Specification Version 6.706. These updates include:- Form A&D and Form C validations, regarding the 1/3 allowable lump sum.
The current trade testing link will remain active for trade testing and the NCTS mailbox will remain open until 30 August 2024.
All submissions for trade testers and ISVs to SARS must be concluded by 15h00 on 30 August 2024 and will be processed as normal. Any submission received after this cut off time will be rejected. Please note all ISV submissions to SARS henceforth must be based on the IBIR-006 Tax Directives interim Interface Specification Version 6.706 requirements. The steps for submitting test files remains the same as previously communicated.
For trade testing queries please email [email protected].
27 August 2024 – Extended Trade Testing and Updated Specification for Two-Pot retirement system
As you are aware SARS has been making system enhancements to the Tax Directives process to accommodate the Two-Pot Retirement Scheme that will commence on 1 September 2024. While trade testing had already commenced on 1 July 2024, it should be noted that the trade testing has been extended to 30 August 2024 to allow for the testing of the latest changes that had been incorporated into IBIR-006 Tax Directives interim Interface Specification Version 6.705. These updates include:
- Rebates Calculation
- Calculation of 1 third allowable Lump Sum
- Definition of Annual Renumeration of IRP3(a)
The current trade testing link will remain active for trade testing and the NCTS mailbox will remain open until 30 August 2024.
All submissions for trade testers and ISVs to SARS must be concluded by 15h00 on 30 August 2024 and will be processed as normal. Any submission received after this cut off time will be rejected. “Live” submissions can commence again after the software implementation on 30 August 2024. Please note all ISV submissions to SARS henceforth must be based on the IBIR-006 Tax Directives interim Interface Specification Version 6.705 requirements. The steps for submitting test files remains the same as previously communicated.
For trade testing queries please email [email protected].
- 15 August 2024 – Two Pot Retirement system: Trade testing has been extended until 30 August 2024
Trade testing commenced on 1 July 2024 and has been extended to 30 August 2024. Please note that the current trade testing link will remain active for trade testing and the NCTS mailbox will remain open until the 30th of August 2024.
The SARS go live as scheduled for Friday 16 August 2024, requires that all submissions for trade testers and ISVs to SARS are done by 15:00 on 16 August 2024. Any submission after this cut off time will be rejected. Processing of files submitted before 15:00 will be as per normal. ISV submissions can commence again after the software implementation on 16 August 2024. Please note all ISV submission to SARS after this release has to be on IBIR-006 Tax Directives interim Interface Specification Version 6.704.
Please follow these steps to submit test files:
Step 1: Before testing can commence, you will need to email 10 taxpayer reference numbers to [email protected] to ensure the numbers are active. In the email subject line, use “Tax reference numbers for Trade Testing”. A maximum of 10 taxpayer reference numbers will be allowed.
Step 2: You will be notified via the same email address to confirm when testing may commence.
For trade testing queries please email [email protected]
- 17 July 2024 – Tax Directives software update for the Two Pot Retirement system
To facilitate the upcoming two-pot retirement system changes, SARS will be making enhancements to the Tax Directives process. The changes are detailed in IBIR-006 Tax Directives Interim Specification Version 6.704. Trade testing commenced on 1 July 2024 and will run till 16 August 2024. Please follow these steps to submit test files:
- Step 1: Before testing can commence, you will need to email 10 taxpayer reference numbers to [email protected] to ensure the numbers are active. In the email subject line, use “Tax reference numbers for Trade Testing”. A maximum of 10 taxpayer reference numbers will be allowed.
- Step 2: You will be notified via the same email address to confirm when testing may commence.
For trade testing queries please email [email protected].
- 27 June 2024 – Trade testing dates: Tax Directives software update for the Two Pot Retirement system
To facilitate the upcoming two-pot retirement system changes, SARS will be making enhancements to the Tax Directives process. The changes are detailed in IBIR-006 Tax Directives interim Interface Specification Version 6.703. Trade testing will commence on 1 July 2024 and run until 16 August 2024. Please follow these steps to submit test files:- Step 1: Before testing can commence, you will need to email 10 taxpayer reference numbers to [email protected] to ensure the numbers are active. In the email subject line, use “Tax reference numbers for Trade Testing”. A maximum of 10 taxpayer reference numbers will be allowed.
- Step 2: You will be notified via the same email address to confirm when testing may commence.
For trade testing queries please email [email protected].
- 19 June 2024 – Tax Directives software update for the Two Pot Retirement system
To facilitate the upcoming two-pot retirement system changes, SARS will be making enhancements to the Tax Directives process. The changes are detailed in IBIR-006 Tax Directives interim Interface Specification Version 6.703. A revised version of the specification will be published once the Pension Fund Administration Bill is promulgated, if necessary. SARS will also communicate trade testing dates in due course.
- 28 May 2024 – Tax Directives software update for the Two Pot Retirement system
To facilitate the upcoming two-pot retirement system changes, SARS will be making enhancements to the Tax Directives process. The changes are detailed in IBIR-006 Tax Directives interim Interface Specification Version 6.702. A revised version of the specification will be published once the law is promulgated. SARS will also communicate trade testing dates in due course.
- 18 March 2024 – Tax Directives software update for the Two Pot Retirement system
To facilitate the upcoming two-pot retirement system changes, SARS will be making enhancements to the Tax Directives process. The changes are detailed in IBIR-006 Tax Directives interim Interface Specification Version 6.701. Once the law has been promulgated, an updated version of the Interface Specification will be made available. SARS will also communicate trade testing dates in due course. - 6 March 2024 – Processing of applications for involuntary transfer before retirement (Par 2[1][c] of the second schedule)
Paragraph 2(1)(c) of the Second Schedule to the Act regulates the amount to be included as gross income for any year of assessment in respect of any amount transferred for the benefit of a member of a retirement fund on, or after normal retirement age, (as defined in the rules of the fund), but before the member elects to retire from that retirement fund, minus any deductions allowed under paragraph 6A of the Second Schedule to the Act.
Prior to 1 March 2022, paragraph 6A of the Second Schedule to the Act allowed the full value of the amounts transferred for the following transfers as deductions, resulting in these transfers taking place on a tax neutral basis:
- Transfers from a pension fund into a pension preservation fund, provident preservation fund, or a retirement annuity fund; and
- Transfers from a provident fund into a pension preservation fund, a provident preservation fund, or a retirement annuity fund.
From 1 March 2022, Paragraph 6A of the Second Schedule to the Act also allowed for transfers into a similar fund by a member of a pension preservation or provident preservation fund (who has reached normal retirement age in terms of the fund rules but has not yet opted to retire from the applicable preservation fund). As a result, these individual transfers would also take place on a tax neutral basis.
To ensure parity among members of retirement funds who are subject to an involuntary transfer — and who have reached normal retirement age in terms of the fund rules, but have not yet opted to retire from the fund — the following changes have been made in the Act:
- Such individuals can have their retirement interest in that pension fund or provident fund transferred to another pension fund or provident fund without incurring a tax liability.
- The value of the retirement interest, including any growth, will remain ring-fenced and preserved in the receiving pension or provident fund until the member retires from that fund. This means that these members will not be entitled to the payment of a withdrawal benefit in respect of the amount transferred.
If a member has reached retirement age, but has not opted to retire and is subject to an involuntary transfer, follow these application steps:
- Go to Find a Form
- Print Forms A and D from the SARS website.
- Manually complete all required fields and select Transfer Before Retirement (Par 2[1][c]) as a reason for the directive.
- Manually edit (scratch out) the transferee type so that the only options are either a Pension Fund or a Provident fund.
Email the completed Tax Directive application to [email protected] with the subject line, “Involuntary Transfer Before Retirement (Par 2[1][c]) Form A&D.
Processing time will be up to the standard 21 days.
- 26 February 2024 — SARS has enhanced the Tax Directives system in line with legislative and system requirements.
View the post implementation letter. - 21 February 2024 – Tax Directives changes and enhancements
SARS plans to introduce enhancements to the Tax Directives system on Friday, 23 February 2024, in line with the IBIR-006 Tax Directives Interface Specification Version 6.601.
The following enhancements will be introduced:
Taxation of local and foreign income, which will cater for South African citizens who earned income both locally and abroad in one Year of Assessment, but who do not qualify for section 10(1)(o)(ii).
Free portability between funds, such as with transfers to unclaimed benefit funds:
The provisions of the Income Tax Act confirm that a deduction equal to the value of the amount transferred will be allowed as a deduction for any transfer from a pension fund and pension preservation fund (including an unclaimed-benefit pension preservation fund).
This means that the transfer will be tax neutral.
The update to the directives system will allow the “Transfer – Unclaimed Benefits” (code 48) to account for transfers between pension, preservation, and provident funds, and unclaimed-benefit funds of each type.
- Free portability between funds: the following fund types will be added to the eFiling RT01 screen drop-down menu:
Unclaimed Pension Preservation Fund.
Unclaimed Provident Preservation Fund.
Please do not submit Tax Directives files on the current form form after 16:00 on 23 February 2024. SARS will queue and process such files after we have upgraded the Tax Directive system.
6 February 2024 – Trade testing dates and software implementation: Tax Directives
SARS will introduce enhancements to the Tax Directives process as indicated in the IBIR-006 Tax Directives Interface Specification Version 6.601. Trade testing is planned to start on 12 February 2024 to prepare for the implementation of the software by end February 2024. In the event that dates are changed, SARS will communicate accordingly.
The Tax Directives Interface Specification is available here and you are encouraged to review it prior to testing.
Please follow these steps to submit test files:
Step 1: Before testing can commence, you will need to email 10 taxpayer reference numbers to [email protected] to ensure the numbers are active. In the email subject line, use “Tax reference numbers for Trade Testing”. A maximum of 10 taxpayer reference numbers will be allowed.
Step 2: You will be notified via the same email address to confirm when testing may commence.
For trade testing queries please email [email protected].
