Understanding Your IRP5

Once a year, your employer hands you an IRP5 — and for most people it goes straight into a drawer, half-understood, until tax season forces a closer look. It's worth ten minutes of your attention, because the IRP5 is the single document that summarises your whole tax year, and knowing how to read it makes filing your return far less stressful.

An IRP5 is the certificate your employer issues showing everything they paid you and everything they deducted and paid over to SARS on your behalf during the tax year. Think of it as the official receipt for your PAYE. Your employer also submits this same information directly to SARS, which is why so much of your tax return arrives pre-filled — SARS already has your IRP5 data.

The document is organised around source codes — four-digit numbers that classify each type of income and deduction. You don't need to memorise them, but a few are worth recognising. Codes in the 3000s describe income: your normal salary, bonus, allowances and so on. Codes in the 4000s describe deductions and contributions: your retirement fund contributions, medical aid, and the PAYE itself. The total income and total deductions are summarised near the bottom, along with the PAYE that was paid over.

When you file your annual return on SARS eFiling, your job is mostly to check rather than to enter. Compare the IRP5 figures against your own records — your final payslip of the tax year is the easiest cross-check, since the year-to-date totals on it should line up closely with the IRP5. If something doesn't match, raise it with your employer before you file, because correcting an IRP5 after the fact is more painful than catching it early.

A few practical habits make tax season painless. Keep every IRP5 for at least five years (SARS can ask). If you had more than one employer in a year, you'll get an IRP5 from each, and your total tax is worked out on the combined income — which sometimes means a shortfall, because each employer only taxed the portion they paid. And if you contributed to a retirement annuity outside your employer, or have medical costs beyond your scheme contributions, those go on your return separately — the IRP5 only covers what ran through your employer's payroll.

This is general information, not tax advice. To reconcile what your PAYE should have been, use the calculator with your annual salary.