The types of tax directives

What is a tax directive?

A tax directive is an instruction from SARS to an employer on how to deduct employees’ tax from certain lump sum payments which are not covered by the prescribed tax tables. The resulting tax calculation varies according to the type of tax directive being applied for. It is important to note that this tax calculation is an estimate, based on information on the SARS tax directive system, and that a final tax liability calculation will be done upon assessment.
Below is a look at the different types of tax directives.
 

Gratuities Tax Directive
This is applied when an employer makes a payment to the employee or their dependents, in the event of death, retirement, retrenchment or other payments such as leave pay cash out.
 

Fixed Percentage Directive
This is applied to employees whose earnings are based on commission. A fixed percentage will be applied each month to the fluctuating earnings.
 

Fixed Amount Directive
This is applied to sole proprietors who have been assessed to be operating at a loss.
 

Deemed Remuneration Tax Directive
This directive is applied to instruct a company of the remuneration amount to be used to calculate tax liability. In most cases, the actual remuneration amount could differ to the instructed remuneration to use.
 

Provident /Pension Fund Withdrawal Lump Sum
This is utilised when a taxpayer withdraws a lump sum from a provident or pension fund in a case of retirement or death.
 

Provident/Pension Fund Payment Lump Sum
The directive is utilised when a lump sum needs to be paid by a provident or pension fund relating to resignation, divorce settlement or withdrawal from the fund.
 

Retirement Annuity Fund Payment Lump Sum
This is utilised when a Retirement Annuity Fund is obligated to make a payment to a member.
 

Lesego Ntlhe
Junior Bookkeeper, Johannesburg

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