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Tax Directive Error Affecting Certain Retirement Fund Transfers

  Written by Nicci   Posted 12 August 2025

TaxTim is aware of a tax directive issue between SARS and certain retirement funds where some fund transfers are incorrectly being treated as taxable events. One of the funds affected, Alexander Forbes, has confirmed that it is aware of the error and is working with SARS to resolve it.

The problem arises when retirement funds are transferred  from one fund to another.  These should not be taxed, but the error has caused some of these transfers to be treated as taxable lumpsums.

SARS have clarified that the resulting error on assessment was primarily driven by administrators using the incorrect income code and tax directive reason on the directive application.

Alexander Forbes has advised taxpayers who are affected to take the following actions:

  • If you have already submitted your tax return, check your submission to ensure any transfer between funds has not been taxed. If you find a lumpsum transfer has been taxed, request a correction and resubmit your tax return.
  • For those who were auto-assessed, Alexander Forbes recommends requesting a tax return and completing it yourself — if no tax return is submitted by 20 October 2025, SARS will treat the "estimated assessment" as final, which could result in a debt being collected.
  • If you have not yet submitted your tax return and you see a lump sum with source code 3614, Alexander Forbes advises that you wait before submitting. This source code has been specifically flagged as potentially affected by the issue, and SARS is working on resolving it.

If you need any help with these steps or have questions, please reach out to TaxTim — we’ll be happy to assist.



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