I want to get a tax directive

What's New?

  • 26 May 2017 - Trade Testing and Go-live date of the enhanced Tax Directive system
    The enhanced Tax Directives System will be operational on 30 June 2017. Trade testing for ISV submissions will commence from 12 June 2017. You are encouraged to participate in the trade testing so that the submission of your files will run smoothly when the new Tax Directives changes have been applied.

    Follow these easy steps:
    Step 1: Before testing can commence you will need to email 10 tax reference numbers to ncts@sars.gov.za to ensure they are valid numbers. In the email subject line, use “Tax reference numbers for Trade Testing”. A maximum of 10 tax reference numbers will be allowed.  You will be notified via the same email address to proceed with testing by submitting the files.  For testing purposes you will receive a response file the same day. In order to expedite trade testing, it is suggested that step 1 is completed prior to the commencement of trade testing.

    Step 2: To ensure compliance with the IBIR-006 specifications, SARS will randomly select IRP3e’s generated from the submitted tax reference numbers and request you to send the IRP3e for reviewing. If it does not conform to the SARS standard, electronic submission to SARS will not be allowed. For more information on the layout, kindly refer to the ‘Processed Directives Response Data Record’ and ‘IRP3 FORM HARD COPY EXAMPLE’ in the IBIR-006 -Tax Directive Interface Specification.

    For any queries to trade testing, you may email ncts@sars.gov.za.

  • 6 April 2017 - Amendments to the Tax Directives Interface Specification
    Please note that a few amendments have been made to IBIR-006 -Tax Directive Interface Specification. As previously communicated, kindly note that all the rules of the Interface Specification need to be followed.

    The following forms were updated with amounts payable after directives were obtained:

For any queries relating to trade testing, you may email ncts@sars.gov.za.

  • 28 February 2017 - Guide for Tax Directive for Emigration and cessation of visas update
    The Tax Directive for Emigration and cessation of visas document was updated with the legislation change to include the requirement that an individual must emigrate from the Republic and that the emigration must be recognised by the South African Reserve Bank for purposes of exchange control in order for an individual to withdraw a lump sum from their retirement annuity fund. For more info, see the Guide for Tax Directive: Emigration and Cessation of Work Visas.

  • 28 February 2017 -Tax Directives legislation changes for 2017
    The legislative changes regarding tax directives come into effect on 1 March 2017.  To accommodate these changes, we are enhancing our tax directive and eFiling systems and would like to bring to your attention a number of changes that are being implemented.

    New forms introduced

    Three news forms are being introduced:

    • Application for a Tax Directive: Share Options section 8A or 8C amount (IRP3(s))
      This application form must be used by employers for any amount to be included under section 8A or 8C of the Income Tax Act. The manual application form will be published on the SARS website later this year.
    • Recognition of transfer (ROT)
      The ROT consists of two separate forms that need to be completed manually and will be published on the SARS website by mid-March 2017:
      • ROT01 – Recognition of transfer between to funds before retirement must be used where a benefit was transferred to approved funds.
      • ROT02 – Recognition of GN18 purchase of a member / beneficiary owned pension/annuity from an insurer must be used to acknowledge the purchase of annuities.

Changes to directive application forms

    • Request for a Tax Directive: Pension and Provident Funds on Retirement/Death before Retirement  - Form A&D
      • The fields for services rendered outside South Africa were removed.
      • More fields for the purchase of annuities when a member retires were added. Where the member purchases an annuity, the Financial Services Board (FSB) registered insurer number is now mandatory.
    •  Request for a Tax Directive: Pension and Provident Funds – Events Before Retirement or Death – Form B
      • The fields for services rendered outside South Africa were removed.
      • More information regarding transfers of benefits is required.
    • Request for a Tax Directive: Retirement Annuity Funds – Form C
      • More information regarding the transfer of a benefit before retirement is required.
      • More fields for the purchase of annuities when a member retires were added. Where the member purchases an annuity, the Financial Services Board (FSB) registered Insurer number is now mandatory.
    • Request for a Tax Directive: After Retirement and Death – Annuity Commutations – Form E
      • The fields for services rendered outside South Africa were removed.
      • The form makes provision for the transfer of annuity from one insurer to another and the insurers’ FSB number is also now mandatory.
      • More detail regarding the purchase of annuities are now required.

You are urgently requested not to use the fields for 'services rendered outside South Africa' from 1 March 2017 going forward.  If these fields are completed, the directive application will be rejected.  To avoid unnecessary delays, please do not complete these fields until they have been removed from the application form.

Directives Response File
On implementation the Directives Response file (DIRS) will include the Payment Reference Number (PRN) to be used for amounts on the IT88L (stop order) attached to the directives where there are assessed tax, administrative penalties and provisional tax outstanding.

Implementation of the enhanced system
The updated IBIR-006 -Tax Directive Interface Specification has been published. Kindly note that all the rules of the Interface Specification need to be followed. Incorrect applications will be rejected. If a taxpayer is registered and the application is submitted without a tax number, the directive will be declined. 

The implementation of the changes on the application forms and the submission of testing files will be communicated as soon as the specifications document for electronic submitted directives is available.

For any queries relating to trade testing, you may email ncts@sars.gov.za.

What is the purpose of a tax directive?

The purpose of a tax directive is to enable SARS to instruct an employer / fund administrator how to deduct employees' tax from certain payments to a taxpayer or for a fixed tax rate for an individual who earns commission income.
Employers and fund administrators can request a tax directive from SARS via the following channels:
  • At a SARS branch – complete the correct form from the list below and submit it at your nearest SARS branch with the relevant supporting documents. Form AD, Form B, Form C and Form E can only be completed by the fund administrator or Insurer and IRP3(a) only by the employer.
  • eFiling – employers and fund administrators can log in and request a directive online.
  • Register as an Interface agent. (Refer to the Tax Directive Interface specification (IBIR006))
Tax calculations according to the tax directive should be regarded merely as an estimate. Some employees may find that they still have to pay in substantial amounts or that a credit may be due to them once the final liability has been determined on assessment.
Application forms have been developed for a specific tax directive. Form AD, Form B, Form C and Form E serve as examples of the form layout. Fund administrators can develop their own application form but must add their own logo and address when submitting the applications forms to SARS offices.
The employer / fund administrator must ensure that the correct application form is used according to the reason for the exit from the fund / employer’s service and the nature of the amount payable to the employee / member of the fund.
 
These are the applications forms for the specific purpose of a tax directive:
  • IRP 3(a) Gratuities paid by employer (e.g. death / retirement / retirement due to ill health, / retrenchment / share options without obligation / / other).
  • IRP 3(b) – Employees' tax to be deducted at a fixed percentage (e.g. commission agents / personal service company / personal service trust).
  • IRP 3(c) – Employees' tax to be deducted at a fixed amount (e.g. Paragraph 11 of the 4th Schedule (hardship) / assessed loss carried forward).
  • IRP 3(d) – Determine deemed remuneration to be used to deduct employees' tax (e.g. Paragraph 11 of the 4th Schedule (hardship) / Paragraph 11C(1)(ii)(bb) of the 4th Schedule)
  • Form AD,– Lump sums paid by pension or provident fund. (e.g. death before retirement / retirement due to ill health / retirement / provident fund – deemed retirement ).
  • Form B – Lump sums paid by pension or provident fund on resignation / withdrawal / winding up / transfer / Section 1, Paragraph (eA) of the definition of gross income transfer or payment / future surplus / unclaimed benefit / divorce – transfer, divorce – non-member spouse / divorce – member spouse / housing loan / termination of employment (retrenchment)).
  • Form C – Lump sums paid by a RAF to a member (e.g. death before retirement / retirement due to ill health / retirement / transfer from one RAF to another / unclaimed benefit / discontinued contributions / future surplus / divorce – transfer, divorce – non-member spouse / divorce – member spouse / emigration withdrawal).

Minimum information required on the application form:

To avoid a delay in the issuing of a directive, the following minimum information is required on the application form:
  • Tax year;
  • Personal detail of the employee / member of the fund, such as:
    • Surname and full names;
    • Date of birth and ID number or other unique number (e.g. passport number, work permit number or non-resident identity number);
    • Annual income (e.g. annual equivalent of current tax year’s income or the total remuneration for the last 12 months), not applicable for the Form A&D, B, C and E with date of accrual after 1 March 2009.;
    • Physical address and postal code; and
    • Postal address and postal code;
  • Income tax reference number [if the income tax reference number was not entered, the reason for non-registration (e.g. SITE, unemployed) must be supplied];
  • Name of employer or fund;
  • Postal address and postal code of employer / fund; and
  • Reason for directive (the relevant reason must be marked on the application form).

Form A&D / B / C / E application forms (minimum information required):

  • The fund approval number (number starting with 18204 plus 6 numeric values) not applicable on form E;
  • The PAYE number of the fund;
  • The membership number or policy number;
  • Type of fund (pension / provident / pension preservation / provident preservation / retirement annuity);
  • Fund created reason (approved fund, public sector fund or other);
  • Date of accrual;
  • Date on which the member became a member of the fund;
  • Gross amount of lump sum payment (including the amount deemed to be accrued in respect of Paragraph 2B of the Second Schedule);
  • Gross amount of total benefit / total value of full annuity;
  • Amount attributed to a non-member’s spouse in respect of a divorce order;
  • The relevant questions on Form AD,must be answered to indicate if the calculation of the benefit is in terms of employment or membership; and
  • Indication on Form AD, if funds are available to provide the member with an annuity; or
  • will the funds be transferred to an insurer to provide a living annuity (name of insurer and the amount transferred must be provided).

IRP 3(a) / (b) / (c) / (d) application forms (minimum information required):

  • The PAYE number of the employer;
  • Date of accrual; and
  • Gross amount of lump sum payment.
The relevant income and expense statement and / or other relevant documentation must accompany the application form if the IRP 3(b) / (c) / (d) application forms are submitted.
Employers or fund administrators may submit manual application forms to SARS office or submit the application forms electronically via an interface agent or register as an agent on the SARS website www.sarsefiling.gov.za.
 

Top Tips:

  • A tax directive is only valid for the tax year or period stated thereon.
  • Employers may not act upon photocopies of directives.
  • Employers may under no circumstances deviate from the instructions of the directive.
  • Tax directives issued to electronic clients via the SARS Interface are valid directives.
  • Employers must apply the percentage of employees' tax as indicated on the directive prior to taking into account allowable deductions for employees' tax purposes (e.g. pension, retirement annuity fund contributions, etc). Where the employer received a directive and the employee’s commission income is not more than 50% of the gross remuneration income the employer can ignore the directive instruction.

 

Last Updated: 26/05/2017 8:53 AM     print this page
SARS eFiling eFiling Login eFiling Register Now eFiling Forgot Password eFiling Forgot Username E@syFile
FIND A PUBLICATION
FIND A FORM
FIND AN FAQ

 Top FAQs

Who should request a tax directive?
Form A&D, Form B, Form C and Form E can only be completed by the fund administrator or insurer. IRP3(a) must be completed by the employer.

What relevant material is required to request for a tax directive?
For Emigration withdrawal the Retirement Annuity Fund administrator must complete a manual Form C and the following documents must be attached to the Form C and submitted to a SARS Branch Office for consideration

Why is it necessary to request a directive application?
Fund administrators / insurers and employers are required in terms of paragraph 9(3) of the Fourth Schedule to the Income Tax Act to apply for a directive for any lump sum payable.

How long is a tax directive valid for?
A tax directive is only valid for the tax year or period stated on the directive.

How do I calculate the tax-free portion of a lump sum received or accrued on or after 1 October 2007 on retirement?
With effect 1 October 2007, Formula A was repealed. The definition of formula B has been amended and the symbols in Formula B (Z=C+E-D) represent the following: