As the South African Revenue Service issues auto-assessments between 1 and 12 July, taxpayers who made two-pot withdrawals or earned extra income may find that a pre-populated return tells only part of their tax story. Those with retirement fund contributions carried forward from previous years may also need to check whether those amounts have been correctly recorded and applied.
Commentary from Allan Gray and Everest Advisory Services highlights several issues that could affect the final tax position. These include the interaction between two-pot withdrawals and other income, retirement fund contributions that were not deductible in previous years, and gaps in the third-party data used to populate returns.
Allan Gray has also drawn attention to a separate issue for taxpayers with outstanding tax debt: SARS’s recovery powers can, in certain circumstances, affect income streams such as living annuities.
The 2026 filing season covers the year of assessment from 1 March 2025 to 28 February 2026. SARS is issuing auto-assessments from 1 to 12 July, while the filing period for non-provisional taxpayers opens on 13 July and closes on 23 October. Provisional taxpayers and trusts have until 22 January 2027.
Moonstone has previously reported on the filing deadlines and on how auto-assessments work, including the circumstances in which taxpayers may receive refunds without submitting returns. We have also covered a new SARS declaration-alert feature intended to allow some discrepancies in third-party data to be addressed before they result in verification delays.
Two-pot withdrawals: tax withheld may not settle the final position
For many taxpayers, the 2026 filing season will be the first in which a withdrawal from the savings component of a retirement fund is reflected in their return.
Lihle Khumalo, tax specialist at Allan Gray, explains that savings-component withdrawals are taxed at the taxpayer’s marginal income tax rate.
The retirement fund administrator should have issued an IRP5 or IT3(a) tax certificate reflecting the withdrawal amount and the tax withheld and paid to SARS, according to Khumalo. The withdrawal is treated as income, and the gross amount must be included in gross income.
But the fact that tax was withheld when the withdrawal was processed does not necessarily mean the taxpayer’s final annual position has been settled.
“It’s easy to assume that the tax on your two-pot withdrawal has already been taken care of by the fund administrator through PAYE, but that is not always the case,” Khumalo says.
“If you had other income during the year, like a bonus, rental income or investment returns, your total taxable income may be higher than expected. This can push you into a higher tax bracket and leave you with additional tax to pay when you submit your return.”
Allan Gray’s point is that tax withheld when the withdrawal is processed may not settle the taxpayer’s final position once other income for the year is considered.
Contributions that were not previously deductible may still matter
A second issue concerns retirement fund contributions that did not qualify for a tax deduction in a particular year.
Khumalo explains that these contributions are carried forward to future tax years as excess contributions. Although current-year retirement fund contributions are reflected on the tax return, the deduction may be limited under section 11F of the Income Tax Act. The balance is then carried forward.
According to Allan Gray, the excess amount appears on the taxpayer’s notice of assessment, the ITA34, as a “brought forward” or “carried forward” amount.
“Review your ITA34 carefully to ensure that excess contributions are correctly recorded and applied to avoid missing out on a legitimate tax deduction,” Khumalo says.
If there is an apparent error, Allan Gray says it may be worthwhile to file a dispute with SARS or contact a SARS branch for assistance.
This is distinct from checking whether current-year retirement contributions appear on a return. A taxpayer may have excess contributions from earlier years that remain relevant to the current assessment.
SARS debt recovery can affect living-annuity income
Allan Gray has also highlighted a separate issue that does not arise from the ordinary filing process itself but from SARS’s powers to recover outstanding tax debt.
SARS can, through a third-party appointment, require a third party such as a bank, employer, or investment provider to settle outstanding tax debt, including associated interest or penalties, using funds held on the taxpayer’s behalf.
According to Khumalo, this can include income streams such as living annuities. Once a third-party appointment has been issued, the recipient is legally obliged to comply and pay the specified amount to SARS.
Allan Gray warns that this can have serious consequences where living-annuity income is affected, particularly for people who depend on regular retirement-income payments.
A pre-populated return is only as good as the underlying information
SARS increasingly relies on third-party data from employers, banks, medical schemes, retirement fund administrators, and other institutions to pre-populate returns and issue auto-assessments.
Taxpayers who have reviewed an auto-assessment and are satisfied that the information is correct generally do not have to submit a return. Where information is incorrect or incomplete, taxpayers may need to update and submit the return through eFiling or the SARS MobiApp.
Thys van Zyl, chief executive of Everest Advisory Services, said the increasing sophistication of SARS’s systems has simplified the process but does not mean an auto-assessment will necessarily capture every item correctly.
“Taxpayers who receive auto-assessments should carefully review their income, deductions, medical tax credits, investment income, retirement fund contributions, and any two-pot withdrawals before accepting the assessment,” he says.
“If any information is missing or incorrect, the tax return should be amended and submitted,” he said.
Khumalo makes a similar point about the limits of pre-population.
“Convenience doesn’t always mean accuracy: It remains your responsibility to review your assessment in detail before accepting,” she says.
Where a taxpayer has reviewed the assessment and is satisfied that it is accurate, no return is required because the assessment is issued automatically.
Where the problem lies in third-party data, however, correcting the return may not be straightforward. Allan Gray says that, in the 2025/26 filing season, taxpayers cannot remove or overwrite incorrect pre-populated information relating specifically to IRP5 certificates. They may need to approach the relevant third-party provider, such as an employer or fund administrator, to have the information corrected at source.
Everest recommends comparing the assessment with records including IRP5 and IT3 certificates, medical scheme, and retirement fund contribution information, investment income, and rental or freelance income. Allan Gray notes that supporting documents should be retained for five years because SARS may request them to verify a return.
