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How do I proceed with a tax directive? (One associated with my ex employer & from the pension fund)

Posted 16 January 2013 under Tax Questions


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I retired on 30th June 2012 and received a SARS Tax Directive that states that "tax amounting to R0.00 is to be deducted from the gratuity / lump sum payment of R308732.65." What use does one make of this tax directive? Am I correct in assuming that this amount is to be subtracted from Income received (Codes 3697 & 3698). Is it still possible to submit my return via the provisional tax electronic medium; or will I now have to file a return manually at the end of February 2013?The previous directive above is associated with remuneration from my past employer; but I have also received a Tax directive that is associated with my pension fund. I have used the entire amount to purchase annuities so I assume that this investment is not liable for tax. Am I correct in this assumption?

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TaxTimTaxTim says:
21 January 2013 at 11:29

A tax directive is a specific instruction issued by SARS detailing what happens to certain amounts such as lumpsums when they are paid out and in the case mentioned above there does not seem to be any tax on the amount. On your return the IRP5/IT3a will already be there with the directive number and you will not be taxed. If it does not appear on your ITR12 tax return then you can always fill in the details, but as I have said you will not be taxed.

You would submit your return as normal and like your IRP5 from your employer the details should already be there!

The investment will not be subject to tax, but there may be tax on the income earned from the investment as you are earning it.


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