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Treasury Considers Limited Withdrawals from Retirement Funds

July 30, 2021

National Treasury

National Treasury is in discussions with NEDLAC on a proposal for limited withdrawals from retirement funds to assist those who lost part of their income during the Covid-19 pandemic.

In a statement, the finance minister, Tito Mboweni, pointed out that it is “proving to be a complex problem to solve, if we are to ensure preservation of savings”.

The minister added that government “continues to engage with trade unions, regulators and other stakeholders to discuss how to allow limited withdrawals linked to tightening preservation by closing current loopholes, and also to expand coverage so that all those employed or earning an income are required to put aside a small proportion for saving for their future”.

According to the minister, amendments are also proposed in the 2021 Taxation Laws Amendment Bill to adjust the conditions required to claim the 12I tax incentive and assist businesses to remain eligible to claim the incentive after the operational difficulties they have faced through the pandemic.

The plan is to move towards a more efficient corporate tax system that has a broader tax base and a lower tax rate.

The minister announced that the South African Special Risks Insurance Association (SASRIA) has already begun its claim administration process and payouts will be honoured to all covered businesses.

Government will also provide full financial backing to SASRIA should solvency levels be exceeded.

The minister also announced that “qualifying uninsured businesses will be supported by the state, partly through a reprioritisation of the existing support mechanisms for SMMEs”.

The package will also include R5 billion in revenue measures with an expansion of the Employment Tax Incentive (ETI) for four months.

Payment deferrals for three months on Pay as You Earn (PAYE) for qualifying industries and deferrals of excise duties on alcohol will be implemented from 1 August.

Spending measures include:

• Temporary re-introduction of the R350 Social Relief of Distress (SRD) grant until the end of the financial year at a cost of R26.7 billion -includes support to child caregivers on an application basis;
• R3.9 billion financial backing of SASRIA;
• R2.3 billion support to small businesses not covered by SASRIA;
• R950 million additional funds to be allocated to the Police (R250 million) and the South African National Defence Force (SANDF) (R700 million).

The Unemployment Insurance Fund has also set aside R5.3 billion for the extension of the Covid-19 Temporary Employer/Employee Relief Scheme.

Meanwhile, the 2021 draft tax bills have been published for comment.

The 2021 draft Rates and Monetary Amounts and Amendment of Revenue Laws Bill (2021 draft Rates Bill), the 2021 draft Taxation Laws Amendment Bill (2021 draft TLAB) and the 2021 draft Tax Administration Laws Amendment Bill (2021 draft TALAB) contain tax proposals made in the 2021 Budget on 24 February 2021.

The draft bills can be viewed at http://www.treasury.gov.za/public%20comments/Tax%20Bills%202021%20Draft/

Comment is sought until 28 August 2021.