Tax Directives – Other

Tax directives are often issued by SARS to instruct employers how to deduct employees’ tax from certain payments such as termination lump sums and arbitration awards. More information about these types of directives can be found in the following article:

However, this page deals with two other types of tax directives, which might be issued in circumstances such as the following:

  • Share Options
  • Exempt Policy Proceeds

The procedure to add a tax directive in the above-mentioned cases is the following:

  • Go to an employee’s profile and click on Add next to Regular Inputs.
  • Click on Tax Directive under Other.
  • Enter the Directive Number.
  • Then select the Directive Type from the drop-down menu:
    • “Fixed Amount – IRP3(c)” – this means that a fixed amount of tax will be deducted on each payslip to which this regular item applies. Enter the Amount.
    • “Fixed Percentage – IRP3(b) and IRP3(pa)” – this means that a fixed percentage of tax will be calculated on the taxable income, before taxable income deductions are taken into account. Enter the Percentage.
  • If you select “Fixed Amount”, you will also need to complete the following additional fields that appear, as they impact the reporting codes to SARS:
    • Directive Issue Date: This refers to the date that SARS issued the directive.
    • Directive Income Source Code: This code relates to the specific income source code indicated on the directive issued. Only those relevant to payroll can be selected.
    • Directive Income Amount: This code relates to the value of the lump sum or taxable benefit corresponding to the directive issued.
  • Click Save.