Especially if you've accessed your two-pot savings component in 2025

With the 2026 tax-filing season around the corner, taxpayers are urged not to assume that submitting a return will be a straightforward administrative exercise, particularly if a withdrawal has been made from the savings component of a retirement fund during the past tax year.

“The tax-filing process may feel familiar, but taxpayers should not approach it on autopilot," says Lihle Khumalo, Allan Gray tax specialist. "Changes to your individual circumstances, such as a two-pot withdrawal, can have important tax implications that need to be properly reflected in your return.”

The 2025/2026 tax-filing season covers the period from 1 March 2025 to 28 February 2026. SARS will issue auto-assessments between 1 and 12 July 2026, while filing for non-provisional taxpayers opens on 13 July and closes on 23 October 2026. Provisional taxpayers have until 22 January 2027 to submit their returns.

Understanding the tax impact of two‑pot withdrawals

Khumalo explains that if you made a withdrawal from the savings component of your retirement fund during the past tax year, it is important to understand that these are taxed at your marginal income tax rate and must be included in your tax return.

“Your retirement fund administrator should have provided an IRP5 or IT3(a) tax certificate reflecting the withdrawal amount, as well as the tax already withheld and paid to SARS,” she says. “The withdrawal is treated as income and the gross amount must be included in your taxable income.”

Don’t be caught off guard

However, taxpayers should not assume that the tax deducted on two-pot withdrawals has already been taken care of by fund administrators through PAYE.

"If you earned other income during the year, such as a bonus, rental income or investment income, your overall taxable income may push you into a higher tax bracket. This could result in additional tax becoming payable when you submit your return."

Review deductions carefully

Khumalo encourages taxpayers to review their tax assessments carefully to ensure they are not missing out on legitimate tax deductions.

Retirement fund contributions that exceed the annual deduction limits are carried forward to future years as excess contributions and may reduce tax liabilities at a later stage.

“Taxpayers should check that any excess contributions have been correctly applied to avoid missing out on a legitimate tax deduction," she says. "If there appears to be an error, it may be worthwhile lodging a dispute or seeking assistance from SARS."

Living annuities and SARS third-party appointments

Taxpayers with outstanding tax debt should also be aware of SARS's powers to recover money owed through a process known as a third-party appointment. Under this process, SARS can instruct a third party, such as a bank, employer or investment provider, to settle your outstanding tax debt, including interest and penalties, using funds held on your behalf.

Khumalo highlights that many taxpayers may be unaware that income streams such as living annuities may also be affected.

"Once SARS issues a third-party appointment, the institution receiving the instruction is legally required to comply. This can have serious consequences, particularly for individuals who rely on living annuity income. Keeping your tax affairs up to date helps avoid scenarios where SARS recovers debt directly from your income sources.”

She encourages taxpayers to proactively monitor their tax affairs and address any outstanding liabilities before SARS is forced to take enforcement action.

SARS auto-assessments – a word of caution

SARS continues to expand its use of auto-assessments, relying on information received from employers, banks, retirement fund administrators and medical schemes to pre-populate tax returns.

Taxpayers selected for auto-assessment will receive a notification from SARS via SMS or email between 1 and 12 July 2026 advising whether a refund is due or whether payment is required.

Khumalo cautions against accepting an assessment without reviewing it thoroughly.

“While auto-assessments are designed to simplify the tax-filing process, convenience doesn’t always mean accuracy. It remains your responsibility to ensure your return is complete and correct.”

As the tax-filing season approaches, she encourages taxpayers to prepare early by confirming all income sources, gathering supporting documents, reviewing deductions and checking their auto-assessments, if applicable, carefully.

“A little preparation can go a long way. Taking the time to ensure your return is accurate from the outset can help you avoid delays, unexpected tax outcomes or unnecessary follow‑ups from SARS,” concludes Khumalo.