Applying a SARS tax directive in payroll
How a South African employer records a SARS tax directive (IRP3) in Achekam and applies it to a lump sum on a pay run, with a second person approving.
By Achekam · · 4 min read · For Running a business businesses in South Africa
Most payslips follow the tax tables. A few do not, and they tend to be the ones that matter most to the employee: a severance package after a retrenchment, a large lump sum on leaving, or a special arrangement SARS has agreed for someone whose earnings do not fit the monthly pattern. For these, SARS issues a tax directive telling the employer exactly how much tax to withhold.
The directive is an instruction, not a suggestion. Apply it wrongly and the employee is over- or under-taxed on what may be the biggest payment of their working life. This article explains how a South African employer records a directive in Achekam and applies it on a pay run.
When a lump sum needs a directive
SARS directives cover payments that the ordinary PAYE tables cannot tax fairly. Severance benefits paid when a post is made redundant are a common example; certain other lump sums on termination are another. SARS can also issue directives that set a fixed percentage of tax for an employee in particular circumstances.
Whether a given payment needs a directive is a question for your tax practitioner or SARS, not for the payroll clerk on the day. What matters for payroll is the sequence: the employer applies for the directive, SARS issues it, and only then is the payment made with the tax the directive specifies.
Plan for the time this takes. If a retrenchment agreement promises payment on the last working day, apply for the directive as soon as the amount is agreed, not when the final run is being prepared.
SARS's guide for employers in respect of employees' tax covers the 2026/27 tax tables, rebates and thresholds and how employers must deduct PAYE, and is the reference to keep beside you when payments fall outside the usual pattern.
Recording the directive SARS issued
In Achekam, SARS tax directives (IRP3) are recorded in payroll and then applied to a run. Work from the directive document itself, not an e-mail summary of it, and have these details in front of you when you record it:
- the employee it applies to;
- the directive number;
- what it applies to, such as a severance benefit or other lump sum;
- either the amount of tax SARS directed or the fixed percentage it set.
Keep a copy of the directive document in the employee's payroll file. When someone checks the run, or the certificate at year end, the directive is the evidence for the tax deducted.
Taxing at the directive's amount or a fixed percentage
Achekam applies a recorded directive to a run in one of two ways, matching the two kinds of instruction SARS gives:
| The directive says | Achekam applies |
|---|---|
| Withhold this amount of tax on the lump sum | The directed tax amount |
| Withhold this percentage of tax | The fixed percentage on the payment |
Take an example in words. An employee is retrenched and is owed a severance package agreed with the business. The employer applies for a directive, and SARS issues one stating the tax to withhold on that package. Payroll records the directive, enters the severance package on the final run as a lump sum, and applies the directive. The package is taxed as the directive says, while the employee's ordinary salary for the month is still taxed by the tables.
Applying it on the run and approving with a second person
Directives go on the regular run. Pay runs can be monthly, fortnightly or weekly, and the lump sum is entered alongside the period's other variable inputs. Each run can be recalculated until it is approved.
Approval works as it does for every run: someone other than the preparer approves it, and nobody can approve a run that pays themselves. For a directive run, give the approver the directive document and ask them to check three things before they approve: that the directive number matches, that the lump sum on the run is the amount the directive covers, and that the tax on the payslip equals the directed amount or percentage.
Once approved, a run is never recalculated, and a mistake can be put right only by a correction run. That makes the approver's check worth the extra few minutes.
The payslip and the year-end certificate
The payslip is a PDF with the business's logo and details, downloaded or e-mailed to the employee. Send it with a short note explaining which amounts were taxed under the directive. Employees who have never seen a directive-taxed payslip often assume something has gone wrong.
At year end, the IRP5 is prepared from issued payslips, so the lump sum and the tax deducted under the directive flow into the certificate. Achekam prepares the certificates and the EMP501 import file but submits nothing to SARS; a person files and records the reference. How the year-end pieces fit together is covered in IRP5, IT3(a) and the EMP501.
What the calculator does without a directive
Achekam's payroll calculator does not handle lump sums without a directive, backdated pay or retrenchment packages. Instead of producing a figure it cannot stand behind, it returns warnings.
Treat a warning on a run as a stop sign. Either the payment needs a directive that has not been recorded yet, or it is one of the other cases that needs a person to work out the tax with your practitioner. Do not approve a run with an unresolved warning just because the deadline is close. The other cases the calculator leaves to a person are explained in what the payroll calculator leaves to you, and the rest of an exit is in paying a South African employee who leaves.
If a lump sum is on the horizon, start today by asking your practitioner whether it needs a directive, and how long SARS is currently taking to issue one.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
