Payroll Concepts > Tax Directives – Termination

A tax directive (IRP3) is issued by SARS to instruct the employer as to how to deduct employees’ tax from certain payments, where this differs from the standard calculations.

Employers are obliged to obtain a tax directive in certain circumstances, such as when paying out any termination lump sums on retirement or retrenchment, including CCMA / Arbitration awards – more details on these aspects can be found in the following section:

SARS also has a discretionary power to issue directives in certain other circumstances, including to alleviate potential hardship faced by an employee or to correct previous tax calculation errors.

More information about adding tax directives in such other circumstances can be found in the following article:

You are using the help system of SimplePay, a payroll system that simplifies the payroll process. Designed just for South Africa, it's a fully online solution. Read more.