Commission Tax in South Africa: How PAYE Works When Your Income Changes

SARS' employer guidance treats commission paid to an employee as remuneration that can be subject to employees' tax. For employees who receive both salary and commission, the employer's payroll treatment depends in part on whether a valid tax directive is in place.

A high-commission month can therefore produce a much larger PAYE deduction than a normal month. That does not automatically mean the deduction is wrong; payroll is trying to withhold tax against remuneration using the applicable rules and information available to the employer.

The 2027 SARS Guide for Employers says that where an employee works for salary and commission and does not have a tax directive, the employer must combine the salary and commission and deduct employees' tax according to the applicable tax deduction tables.

The guide specifically warns that an employer should not simply deduct 25% or another arbitrary percentage from this remuneration unless a tax directive instructs that treatment.

SARS provides an IRP3(b) directive process for employees' tax to be deducted at a fixed percentage in certain circumstances, including commission agents. SARS says an employee earning commission may apply for a directive where remuneration consists mainly of commission based on sales or turnover attributable to that employee.

Where the employer has a valid directive, SARS' employer guide says employees' tax must be deducted according to the directive instructions. The directive does not change the underlying annual income-tax system; it changes how PAYE is withheld during the year.

SARS' guide for employee tax certificate codes identifies code 3606 for commission that is subject to PAYE. The employer guide also describes salary income under code 3601 when salary and commission are both paid.

Your IRP5 should be reviewed together with your payslips rather than in isolation. If the year-to-date salary, commission or PAYE totals do not reconcile with your records, raise the difference with payroll before filing where possible.

South African individual income tax is assessed over the tax year, while PAYE is withholding during the year. If your commission is volatile, a single payment can look large relative to your usual monthly income even though your final annual taxable income depends on the full year's earnings and allowable amounts.

That is why a useful commission calculator should do more than show one monthly figure. A year-to-date projection can help you understand the direction of the annual position, but it remains an estimate until the full facts are known and SARS issues an assessment.

SARS' supporting-document guidance specifically mentions documents and receipts for commission-related expenditure and a logbook where business travel deductions are claimed. Commission earners should also keep the same core income records used by other employees.

The exact documents needed depend on the deductions or income items in your return. Keep enough evidence to explain each figure without relying on memory months later.

A public calculator cannot know every payroll fact, fringe benefit, directive condition or adjustment that may affect your actual PAYE. Use it to compare a payment, spot a material difference and model the rest of the year.

If the result differs materially from payroll, verify your inputs, check whether a directive applies, and ask payroll or a registered tax practitioner where the treatment is unclear.