SARS tax directives — when and how to apply
A tax directive is an instruction from SARS telling the employer exactly how much tax to withhold on a specific payment. It is compulsory for retirement and severance lump sums, and optional but useful for commission earners with volatile income. Paying a lump sum without a directive is one of the fastest ways to trigger an EMP501 mismatch and a penalty.
Payroll Africa Editorial · SARS Payroll Compliance Team
The Payroll Africa editorial team is composed of registered tax practitioners, payroll administrators and BCEA specialists who maintain the SARS PAYE, UIF, SDL and ETI engines that power the platform. Every article is reviewed against the current SARS BRS and Basic Conditions of Employment Act before publication.
- SARS registered tax practitioners
- SAPA-affiliated payroll administrators
- BCEA and LRA compliance reviewers
Last updated 26 Aug 2026
When a directive is compulsory
Any payment taxed outside the ordinary PAYE tables needs a directive. That includes severance benefits on retrenchment, retirement fund lump sums, withdrawal benefits, and gratuities on death or retirement.
The employer applies before paying, receives the directive with a rand amount or percentage, and withholds exactly that. The directive number must be reported on the IRP5.
- Severance benefit on retrenchment — IRP3(a)
- Retirement or withdrawal lump sum from a fund — fund applies
- Death benefits and gratuities
- Backdated salary or arrear payments spanning tax years
- Directive number is a required IRP5 field
Severance and the R550,000 tax-free amount
Severance benefits and retirement lump sums share a single lifetime tax table. The first R550,000 is taxed at 0%, then 18%, 27% and 36% on the bands above it, cumulative across the taxpayer's lifetime.
Because the table is cumulative, SARS must calculate it — the employer cannot. This is why the directive is compulsory: SARS looks up prior lump sums before issuing the amount to withhold.
Fixed-percentage directives for commission earners
Employees whose income is mostly commission can apply for an IRP3(b) fixed-percentage directive. SARS sets a single percentage to apply to all their remuneration for the year, smoothing the tax across high and low months.
The directive is valid for the tax year stated and must be renewed. While it is in force, the employer applies the percentage instead of the tax tables.
- IRP3(b) — fixed percentage for commission and variable earners
- IRP3(c) — fixed amount, used in specific circumstances
- Valid for the stated tax year only; renew annually
- The employer must apply the directive exactly, not adjust it
- Capture the directive number against the employee in payroll
How to apply
Applications are lodged on SARS eFiling under Tax Directives, or through e@syFile for bulk lump-sum applications. Turnaround is usually a few working days, so build it into the termination timeline rather than paying first and correcting later.
Common rejection causes: the employee's tax affairs are not up to date, the fund or employer details do not match SARS records, or the reason code chosen does not match the payment.
Handling directives in Payroll Africa
Record the directive number, type and amount or percentage against the employee. Payroll Africa then overrides the normal PAYE calculation for that payment, tags the correct SARS source code, and carries the directive number through to the IRP5 and EMP501 export so the reconciliation balances first time.
Frequently asked questions
Related guides
Ready to run compliant SARS payroll?
Start free, migrate in a day, and process your first payroll in minutes.