If you’ve been reading the previous posts on SARS submissions, you might know that the deadline is now on the horizon.  Manual tax returns have to be submitted by the 28th of September, and SARS efiling submissions need to be completed by the 23rd of November 2012. Of course, if you’re a provisional tax payer, then you have a little more time. Your submission is only due in January next year.  In today’s post, we will be addressing tax directives:

What is a tax directive?

Each month, an employer will deduct PAYE and SITE from an employee’s income based on guidelines from SARS. If that employee earns commission as part of his or her income, and the commission is greater than 50% of their total earnings, then that employee could apply for a tax directive.

The directive would fix your tax at a prescribed percentage regardless of what the employee might have earned in that tax year.  Ultimately, this results in a tax saving on a monthly basis and an ‘advance’ on what you would have normally received at the end of the year when submitting your full tax return.

How do I go about applying for a tax directive?

As a starting point, consulting with a tax expert would be advisable to ascertain whether a tax directive is viable for you.

Application forms are available for application of a tax directive and are easily accessible at www.sars.gov.za. When applying for a tax directive, the employer must ensure that the correct application form is used to detail the nature of the amount payable to the employee.

According to SARS, to avoid a delay in the issuing of a directive, the following information is required:

  • Tax year;
  • Personal detail of the employee
  • 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. 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).

For more information on directives and to download the relevant forms, visit http://www.sars.gov.za/home.asp?pid=221.

Let us know if you have any questions and we’ll do our best to assist.