It’s that time of the year again and employers are issuing their employees IRP5s for the tax year. An IRP5 is a tax certificate which shows the total employment income that you earned for the tax year, the total employment related deductions that were taken from your income and paid over to either a retirement fund (pension, provident or retirement annuity fund) or a medical aid and the total tax (PAYE, UIF and SDL) that you paid. The 2019 tax year runs from 1 March 2018 to 28 February 2019. You will need your 2019 IRP5 to complete your 2019 tax return come 1 July, when filing season opens.
Employees under the age of 65 years who earn under the tax threshold do not receive an IRP5 – instead, they will receive an IT3(a). The IT3(a) also displays total income earned, however there won’t be any tax reflected on it as the income is under the tax threshold. Pensioners who are 65 years and older, may also receive an IT3(a) if their annual pension is less than the tax threshold and therefore is not subject to tax (2019: tax threshold is R121 000 for 65 – 74 years and R135 300 for 75 years and older). Taxpayers are often confused by their IRP5/IT3(a) and don’t understand how it fits into their tax return.
Please read below for some FAQs we have received on our Helpdesk.
1. I received an IRP5 from my employer, but I don’t understand why there are so many codes on it. Can you tell me what these codes represent: 3601,3699,4005 and 4102?
Source code 3601 represents the total salary that you earned for the tax year. Source code 3699 is your total taxable income and includes salary, commission and fringe benefits amongst other sources of employment income that’s used to calculate PAYE.
Source code 4005 is the total medical fund contribution that you made for the year (employer plus employee contribution) and source code 4102 is the total Pay As You Earn (PAYE/ employees tax) that your employer deducted from your salary for the year.
2. I am a commission earner so my income (and related tax payments) fluctuate every month. My income is reflected under source code 3606 on my IRP5. Is there any way that I can have a set rate of tax deducted each month?
You can apply for a fixed percentage tax directive. A tax directive is an instruction from SARS to your employer for your tax to be deducted at a set, fixed rate each month. In order for this to be done, you need to apply for a tax directive and you’ll have to supply supporting evidence of estimated earnings and expenses. SARS won’t consider a tax directive if you don’t submit a detailed income and expense statement with your application.
Considering a tax directive is based on income estimation, it’s not your full or final tax liability. Your annual tax assessment, evaluated on actual earnings, will determine the total tax due, which may or may not result in a further amount payable to SARS.
A tax directive makes sense in cases where commission due (and subsequently your total income) varies by only a small margin each month, and you have a fairly predictable track record on which to base an estimate. In instances where commission is less stable, it’s probably not such a good idea to consider taxation at a fixed rate, as this is likely to result in a significant difference between estimated and actual earnings, and therefore on final tax liability too.
A tax directive is valid only for a maximum of a 12-month period, and as such you’ll have to reapply each year, or in the event of changing employers.
3. I have not received an IRP5 for the 2018 tax year and the company I worked for have since closed. How can I submit a tax return without it?
If you are planning on submitting your return via eFiling, and your employer did submit your IRP5 to SARS, the IRP5 should reflect on your ITR12 and you can compare it to your payslips to make sure that the amounts on the IRP5 are correct.
Should there however not be an IRP5 on your eFiling account, you will have to take your payslips, a sworn affidavit in which you explain that you were not given an IRP5 and 12 month’s bank statements to SARS and ask them to complete the return for you. SARS calls this an ‘estimated assessment’.
4. Will my IRP5 ever expire?
Your IRP5 can never expire; it is just a summary of all your payslips for a specific tax year.
5. Is the number on my IRP5 a valid tax number or should I register?
There may be a number on your IRP5 beginning with a 0,1,2, or 3 - that would be your ten-digit tax reference number. Your IRP5 certificate number might also include your tax number, please check that too.
6. When is the right time to submit my IRP5?
We recommend that you file your return as soon as the tax season starts (1 July), especially if you are due a refund. Even if you are not due a refund or in fact owe tax to SARS, it is always advisable to be compliant with SARS and file within the prescribed deadline i.e. tax year 2019: deadline for salaried employees is 4 December 2019.
7. What is the maximum number of IRP5's that can be submitted through eFiling per year?
On the eFiling wizard page (the first page), just enter the number of IRP5's that you have in the number entry box. Then when you click the button to generate your tax return form there will be multiple IRP5 sections. If your employer/s correctly submitted the IRP5/s for you, then the details of each IRP5 should already be prepopulated in each IRP5 section. If they are not all there, you can enter the details manually however be sure to check back to your employer to ensure they submit your IRP5 to SARS as well.
Don't worry about adding up any amounts or trying to combine multiple into one - you need to include each IRP5 separately on your single ITR12 tax return for the year so just do one at a time. Currently the maximum IRP5s that you can add on your return is fifteen.
8. The banking details on my IRP5 are out-dated. Can I fix this myself or should I ask my employer to fix it and then give me a copy with the correct banking details on it.
There is no need for you to fix your banking details on the IRP5 or for your employer to correct the IRP5. You can fix them on your tax return yourself.
9. What is the difference between and IRP5 and an ITR12?
An ITR12 is the Income Tax Return for all individuals (including provisional taxpayers) for a particular tax year. An IRP5 is a summary of all your payslips for the year and it must be included in your ITR12, along with details of your other income and deductions.
10. I was retrenched and received a pension pay-out. I also received an IRP5 - what does this mean and must I include it in my tax return?
You should already have tax withheld on the pension pay-out; however, you should still include the IRP5 details in your tax return. Please read our blog here for further details.