I want to get a tax directive

What’s New?

For Frequently Asked Questions on the tax implications of the Two-Pot Retirement Fund System, see the Two-Pot system webpage.

If you are an Independent Software Vendor (ISV), click here.

• 30 August 2024 – Updated Specification for Two-Pot retirement system
  
  As you are aware SARS has been making system enhancements to the Tax Directives process to accommodate the Two-Pot Retirement Scheme. While trade testing had already commenced on 1 July 2024, it should be noted that the trade testing has been extended to 30 August 2024 to allow for the testing of the latest changes that had been incorporated into IBIR-006 Tax Directives interim Interface Specification Version 6.706.  These updates include:
  • Form A&D and Form C validations, regarding the 1/3 allowable lump sum.

  The current trade testing link will remain active for trade testing and the NCTS mailbox will remain open until 30 August 2024. 

  All submissions for trade testers and ISVs to SARS must be concluded by 15h00 on 30 August 2024 and will be processed as normal.  Any submission received after this cut off time will be rejected.   Please note all ISV submissions to SARS henceforth must be based on the IBIR-006 Tax Directives interim Interface Specification Version 6.706 requirements. The steps for submitting test files remains the same as previously communicated.

  For trade testing queries please email [email protected].

• 27 August 2024 – Extended Trade Testing and Updated Specification for Two-Pot retirement system

  As you are aware SARS has been making system enhancements to the Tax Directives process to accommodate the Two-Pot Retirement Scheme that will commence on 1 September 2024. While trade testing had already commenced on 1 July 2024, it should be noted that the trade testing has been extended to 30 August 2024 to allow for the testing of the latest changes that had been incorporated into IBIR-006 Tax Directives interim Interface Specification Version 6.705.  These updates include:

  • Rebates Calculation
  • Calculation of 1 third allowable Lump Sum
  • Definition of Annual Renumeration of IRP3(a)

  The current trade testing link will remain active for trade testing and the NCTS mailbox will remain open until 30 August 2024. 

  All submissions for trade testers and ISVs to SARS must be concluded by 15h00 on 30 August 2024 and will be processed as normal.  Any submission received after this cut off time will be rejected.   “Live” submissions can commence again after the software implementation on 30 August 2024.  Please note all ISV submissions to SARS henceforth must be based on the IBIR-006 Tax Directives interim Interface Specification Version 6.705 requirements. The steps for submitting test files remains the same as previously communicated.

  For trade testing queries please email [email protected].

• 15 August 2024 – Two Pot Retirement system: Trade testing has been extended until 30 August 2024 
  
  

  Trade testing commenced on 1 July 2024 and has been extended to 30 August 2024. Please note that the current trade testing link will remain active for trade testing and the NCTS mailbox will remain open until the 30^th of August 2024. 

  The SARS go live as scheduled for Friday 16 August 2024, requires that all submissions for trade testers and ISVs to SARS are done by 15:00 on 16 August 2024.  Any submission after this cut off time will be rejected.  Processing of files submitted before 15:00 will be as per normal.  ISV submissions can commence again after the software implementation on 16 August 2024.  Please note all ISV submission to SARS after this release has to be on IBIR-006 Tax Directives interim Interface Specification Version 6.704.

  Please follow these steps to submit test files:  

  Step 1: Before testing can commence, you will need to email 10 taxpayer reference numbers to [email protected] to ensure the numbers are active.  In the email subject line, use “Tax reference numbers for Trade Testing”. A maximum of 10 taxpayer reference numbers will be allowed.

  Step 2: You will be notified via the same email address to confirm when testing may commence.

  For trade testing queries please email [email protected]

• 17 July 2024 – Tax Directives software update for the Two Pot Retirement system
  
  To facilitate the upcoming two-pot retirement system changes, SARS will be making enhancements to the Tax Directives process. The changes are detailed in IBIR-006 Tax Directives Interim Specification Version 6.704. Trade testing commenced on 1 July 2024 and will run till 16 August 2024. Please follow these steps to submit test files:
  
  
  • Step 1: Before testing can commence, you will need to email 10 taxpayer reference numbers to [email protected] to ensure the numbers are active. In the email subject line, use “Tax reference numbers for Trade Testing”. A maximum of 10 taxpayer reference numbers will be allowed.
    
    
  • Step 2: You will be notified via the same email address to confirm when testing may commence.

For trade testing queries please email [email protected].

• 27 June 2024 – Trade testing dates: Tax Directives software update for the Two Pot Retirement system
  
  To facilitate the upcoming two-pot retirement system changes, SARS will be making enhancements to the Tax Directives process. The changes are detailed in IBIR-006 Tax Directives interim Interface Specification Version 6.703. Trade testing will commence on 1 July 2024 and run until 16 August 2024. Please follow these steps to submit test files:
  
  
  • Step 1: Before testing can commence, you will need to email 10 taxpayer reference numbers to [email protected] to ensure the numbers are active. In the email subject line, use “Tax reference numbers for Trade Testing”. A maximum of 10 taxpayer reference numbers will be allowed.
    
    
  • Step 2: You will be notified via the same email address to confirm when testing may commence.

For trade testing queries please email [email protected].

• 19 June 2024 – Tax Directives software update for the Two Pot Retirement system 
  
  To facilitate the upcoming two-pot retirement system changes, SARS will be making enhancements to the Tax Directives process. The changes are detailed in IBIR-006 Tax Directives interim Interface Specification Version 6.703. A revised version of the specification will be published once the Pension Fund Administration Bill is promulgated, if necessary. SARS will also communicate trade testing dates in due course.

What is the purpose of a tax directive for lump sums?

The purpose of a tax directive is to enable SARS to instruct an Employer, Fund Administrator or Insurer how to deduct employees’ tax from certain lump sums to a taxpayer or member. 

ONLY Employers, Fund Administrators and Insurers can request a tax directive from SARS via the following channels:

• eFiling – Employers and Fund Administrators who have an organisation profile can log in and request a directive online.
• Register as an Interface agent. (Refer to the Tax Directive Interface specification)
• In exceptional cases use the email address. Please state the reason why the lump sum tax directive cannot be submitted through the above channels and supporting documents may be submitted here after receiving a case number after sending the email. 

Tax calculations according to the tax directive should be regarded merely as an estimate according to the information on SARS tax directive system. 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 in accordance with the date of accrual.

Application forms are available for specific tax directive types. FORM A&D, FORM B, FORM C and FORM E serve as examples of the form layout.

The Employer / Fund Administrator / Insurer 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.

What is the purpose of a hardship directive?

Here is a complete list of application forms available:

Submit via eFiling only:

• IRP 3(b) – Employees’ tax to be deducted at a fixed percentage (e.g. commission agents / personal service company / personal service trust / freelance artist). Can be submitted only via eFiling by an individual or tax practitioner
• 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). Can be submitted only via eFiling by an individual or tax practitioner.
• IRP3(f) – Doubtful Debts 11(j)(1)(2). Can be submitted only via eFiling.
• IRP3(q) – Foreign Tax Credit under paragraph 10 of the 4th Schedule to the Income Tax Act. Can be submitted only via eFiling.

Submit via eFiling or Independent Software Interface:

• IRP3(a) – Gratuities paid by employer (e.g. death / retirement / retirement due to ill health / severance benefits / other – to supply reason for payment).
• IRP 3(d) – Decommissioned.
• IRP3(s) – Employees’ tax to be deducted on any amount to be included under section 8A or 8C of the Income Tax Act.
• Form A&D – Lump sums paid by pension, pension preservation fund, provident or provident preservation 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 (e.g. 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) including withdrawals from a pension preservation or provident preservation fund).
• 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 / discontinued contributions / future surplus / divorce – transfer, divorce – non-member spouse / divorce – member spouse / emigration withdrawal / visa expiry).
• Form E – Lump sums paid after retirement by an insurer or a fund (e.g. Death Member / Former Member after Retirement, Par. (c) Living Annuity Commutation, Death – Next Generation Annuitant, Next Generation Annuitant Commutation / Transfer of an annuity to another insurer / Par (eA) Living Annuity Commutation – Termination of a Trust).
• ROT01 – Recognition of transfer between two funds before retirement must be used where a benefit was transferred to another approved fund.
• ROT02 – Recognition of GN18 purchase of a member / beneficiary owned pension / annuity from an insurer must be used to acknowledge the purchase of annuities.

Employers, Fund Administrators or Insurers can submit the application forms electronically via an interface agent or register on SARS eFiling.  Only in exceptional cases where the tax directive application form cannot be processed successfully through any of the electronic platforms can the hard copy tax directive application form be emailed to only one of the email addresses on the SARS website. IRP3(b) and IRP3(c) hard copy applications will no longer be submitted through email.

Minimum information required on the application form:

To avoid a delay in the issuing of a directive, the following crucial minimum information is required on all the tax directive application forms:

• 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);
  • 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. unemployed) must be supplied];
• Name of employer, fund or insurer;
• Postal address and postal code of employer / fund / insurer; and
• Reason for directive (the relevant reason must be marked on the application form). 

For more detailed information required on the Form A & D / B / C / E application forms:

• Refer to the IT-AE-41-G02 – Guide to Complete the Tax Directive Application Forms for information required per application form.

Minimum information required on the IRP 3(a) / (b) / (c) / (s) application forms:

• The PAYE number of the employer;
• Date of accrual; and
• Gross amount of lump sum payment or Gross value of gain / amount.

IRP 3(c) is submitted to SARS to consider alleviating hardship due to circumstance outside the control of the taxpayer, the taxpayer must provide reasons and where possible attached supporting documents assure SARS that the situation is outside his / her control and has caused financial hardship. Cases will be reviewed on an individual basis to determine whether the taxpayer qualifies for a hardship tax directive under these circumstances.

Refer to the IT-AE-41-G01 – Completion Guide for IRP3a and IRP3s Form – External Guide for more detailed information required per application form.

Top Tips:

• A tax directive is valid only for the tax year or period stated therein.
• Employers may decline to accept 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 in 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.
• From an eFiling perspective, Tax Directive applications submitted before 1 July 2017 can be viewed, cancelled and printed under ‘Tax Directives –prior to 2017’ in the left hand menu on eFiling.
• Electronic confirmation of receipt: From July 2017 the receiving fund of the transferred benefit or the Insurer where the annuity was purchased must electronically confirm the receipt of the transferred benefit or benefit transferred to purchase an annuity.  If the receiving fund cannot submit the Part B of the ROT electronically, the transferring fund is responsible to submit the manual comprehensive ROT (Part A and Part B) to SARS. 

To see info for Independent Software Vendors (ISV’s) or Interface agents, click here.