This is applied to employees whose earnings are based on commission. A fixed percentage will be applied each month to the fluctuating earnings.
A tax directive is not a suitable option when;
- You only declare your income, including commission income to SARS once a year
- Your commission income does not drastically fluctuate from month-to month
- You do not earn commission
What to keep in mind when applying for a tax directive
- The percentage allocated to a taxpayer by SARS is not a flat rate. It is merely an estimated rate based on the information provided to SARS for commission earners, who’s commission income fluctuation drastically
- A tax directive estimated percentage does not replace the actual tax rate. The tax payer is still responsible at year-end to pay taxation on the actual applicable tax rate based on their total earnings for the year under
- Monthly calculations should be kept by tax payers to ensure they make tax provision for the difference between the estimated tax directive percentage and actual
- For example. If SARS allocates the taxpayer with an 18% tax directive, then the taxpayer will only be liable to pay 18% PAYE on their earnings that are declared to SARS, but at year-end after calculating the physical income tax return for the applicable period, the taxpayer’s total income for instance, places them in a tax bracket of 41%, then the taxpayer will be liable to pay in the difference between the 18% tax rate approved and the 41% tax rate that is the actual payable tax rate
- You cannot apply for a specific tax directive percentage. SARS allocates a percentage to the taxpayer based on the information provided to SARS.
