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Commission Earners & Tax in South Africa

If you earn commission in South Africa — as an estate agent, financial advisor, insurance broker, car salesperson, or any other performance-based role — SARS treats your income differently from a regular salary.

Understanding these rules could mean the difference between owing SARS money and receiving a substantial refund. TTT Financial Group has been helping commission earners maximise their returns since 2012.

1. Who Qualifies as a Commission Earner?

A commission earner is someone whose income varies based on performance — typically a percentage of sales or deals closed. SARS classifies this as variable remuneration under IRP5 source code 3606.

Common roles include: estate agents, financial advisors, insurance brokers, car dealership sales executives, telecommunications sales consultants, pharmaceutical reps, and recruitment placement consultants.

The Critical 50% Rule

To unlock the full range of expense deductions available to commission earners, more than 50% of your total remuneration must consist of commission or variable income (IRP5 code 3606).

This threshold determines everything. Check your IRP5 every year — if your employer has coded commission incorrectly as a salary (code 3601), you lose access to these deductions entirely.

Who Qualifies as a Commission Earner?

2. How SARS Treats Commission Income

Commission income is fully taxable. However, unlike salaried employees, commission earners can deduct a much wider range of business expenses under Section 11(a) of the Income Tax Act — expenditure actually incurred in the production of income, provided it is not capital in nature.

Why Many Commission Earners Overpay PAYE

Your employer calculates PAYE using the averaging method — projecting your year-to-date earnings forward. During low-earning months, this often results in PAYE being over-deducted. Many commission earners are entitled to substantial refunds at year-end precisely because of this.

3. What You Can (and Cannot) Deduct

If you meet the 50% threshold, the following expenses are deductible — provided they were actually incurred in the production of commission income and are properly documented.

Deductible Expenses

  • Vehicle costs — fuel, maintenance, insurance, depreciation (with logbook)
  • Cell phone and data — business-use portion
  • Professional subscriptions — PPRE, FPI, industry body fees
  • Marketing and advertising — boards, business cards, personal digital ads
  • Client entertainment — with receipts and documented purpose
  • Training and CPD — directly related to your role
  • Stationery and office supplies
  • Home office — if used regularly and exclusively for work
  • Retirement Annuity contributions — up to 27.5% of income

Not Deductible

  • Clothing wearable outside of work (including suits)
  • Personal meals, groceries, and private entertainment
  • Traffic fines and penalties
  • Capital expenditure — use depreciation instead
  • Expenses without receipts or documentation
  • School fees and personal household costs

4. Travel Allowance & Logbook: The Big One

For most commission earners, the travel claim is the single biggest deduction available. If your employer pays a travel allowance (IRP5 code 3701), 80% is included in your taxable income by default — but if you keep a SARS-compliant logbook, you can claim actual business kilometres, often resulting in a far larger deduction.

Your Logbook Must Record

  • Date, destination, and business purpose of every trip
  • Opening and closing odometer reading per trip
  • Client name or business reason for the trip
  • Opening odometer on 1 March and closing on 28 February each year
  • Total business km vs total km driven for the year

Warning: Logbook Non-Compliance Is the #1 SARS Audit Trigger

An incomplete, missing, or retrospectively compiled logbook will result in SARS disallowing your entire travel claim — plus potential penalties. Maintain it daily, or use a GPS app (MileIQ, TripLog) that auto-records every trip.

5. Home Office Deduction for Commission Earners

Commission earners who work from a dedicated home workspace are entitled to claim a proportional deduction on their household costs. This deduction is legitimate and well-established under SARS rules — but it comes with requirements that must be met precisely.

The Requirements SARS Enforces

The space must be used regularly and exclusively for trade — meaning it cannot be a multi-purpose room that sometimes doubles as a guest bedroom or children’s homework desk. It must be a specifically equipped workspace: a proper desk, office equipment, files, and dedicated work infrastructure. SARS does not accept a corner of the lounge or a kitchen table as a qualifying home office.

6. Provisional Tax & Fixed Tax Directives

Provisional Tax

Many commission earners must register as provisional taxpayers — particularly those earning from multiple sources or receiving investment income above R 30 000 per year from non-employment sources. Missing a deadline results in interest and a potential 20% underestimation penalty.

Fixed Tax Directives — Take Home More Every Month

A Fixed Tax Directive is a SARS instruction to your employer to deduct PAYE at a specific fixed rate — instead of the variable averaging method. If you have significant deductions that reduce your effective tax rate, a directive means you stop overpaying every month and start seeing the benefit in your take-home pay immediately, rather than waiting for a year-end refund.

TTT Can Apply for Your Fixed Tax Directive

This is one of the most underutilised tools available to commission earners. TTT Financial Group handles the application directly with SARS on your behalf. The result is often an immediate increase in monthly take-home pay.

Provisional Tax

The Three Provisional Tax Payments

31 August 2025

Pay 50% of your estimated total tax liability for the year, less any tax credits, rebates, and PAYE already deducted by your employer.

27 February 2026

Pay the balance of your estimated full-year tax, less the first payment made in August and all applicable credits and PAYE deductions.

30 September 2026

An optional third payment that allows you to top up your provisional tax to avoid interest charges on any underpayment once your actual annual tax is assessed.

7. Five Costly Mistakes to Avoid

Not keeping a logbook

Reconstructing a logbook retrospectively is not acceptable to SARS. Start on 1 March and maintain it daily — a missing logbook means your entire travel claim gets disallowed.

Incorrect IRP5 code from your employer

If your employer codes your commission as a salary (code 3601 instead of 3606), you lose access to all enhanced deductions. Check your IRP5 before filing every single year.

Missing provisional tax deadlines

31 August and 28 February are non-negotiable. Late payments attract interest at the repo rate plus penalties. If you’re unsure whether you need to register, ask TTT before the deadline — not after.

Under-claiming deductions

Retirement annuity contributions, medical out-of-pocket expenses, and Section 18A charitable donations are frequently overlooked. So is the option to recover missed deductions from the past 3 years via a reduced assessment request.

Filing without a specialist

The commission earner tax return is one of the most complex individual returns. The fee for a professional tax practitioner is typically a fraction of the additional refund they secure — and they take the SARS risk off your desk entirely.
Tax Refund

8. How to Maximise Your Refund

  • Contribute to a Retirement Annuity (RA). Deductible up to 27.5% of the greater of your taxable income or remuneration. This is the single most powerful legal tax reduction tool available.
  • Apply for a Fixed Tax Directive if your deductions reduce your effective rate significantly — stop overpaying monthly rather than waiting for a refund.
  • Claim all medical expenses. The Medical Aid Tax Credit plus out-of-pocket costs (dental, specialist, prescribed meds) both reduce your tax liability.
  • Optimise your travel claim annually. Compare the SARS deemed cost rate vs actual cost method each year. The better option changes depending on km driven and your vehicle’s value.
  • Claim Section 18A donations. Donations to SARS-approved public benefit organisations are deductible up to 10% of taxable income. Obtain the official certificate.
  • Review prior years. SARS allows reduced assessments for the past 3 years if deductions were missed. TTT has recovered significant refunds for clients who under-claimed previously.

9. Common Questions

Can I claim vehicle expenses without a travel allowance?

Yes — if more than 50% of your income is commission and you use your own vehicle for business purposes, you may still claim vehicle costs. You need a logbook, and your vehicle costs must not already be reimbursed by your employer.

Do I need to register for VAT?

If your commission income exceeds R 1 million in any consecutive 12-month period, VAT registration is compulsory. Below R 1 million it is voluntary. Note that insurance and financial advisory commission is generally VAT-exempt.

What if SARS selects me for an audit?

SARS scrutinises commission earner returns closely, particularly large travel and expense claims. If selected, you’ll need to submit supporting documents. TTT Financial Group provides full audit support and represents clients throughout the process — you don’t deal with SARS alone.

I haven’t filed in years. Can TTT help?

Yes. We assist clients with outstanding returns, SARS debt management, voluntary disclosure, and getting compliant while minimising penalties. The sooner you act, the smaller the exposure.