Set up provision for tax on annual bonus calculation
Description
The method of calculation calculates the provision amount per period, based on the employee's bonus. The system automatically corrects the provision when you change the bonus amount.
Cause
Resolution
Define field for bonus amount
You'll need to determine a field on the payroll to store the bonus amount. The method of calculation uses this amount to calculate the provision per period using the formula: (Guaranteed Bonus – YTD Provision amount) ÷ Remaining periods in the tax year
For example, a 13th cheque bonus uses the Fixed Salary field (E011). If the bonus amount calculates differently, use a Calculation screen field. You'll need to specify the field in the calculation.
NOTE:
When the employee's bonus amount changes, update the field to reflect the new bonus. The calculation will recalculate provision based on the new amount.
Add the provision method of calculation
Access your payroll company form the Company Listing screen.
From the Main Menu, go to Payroll, then select Definitions.
Select Method of Calculations.
Click Add.
On Methods of Calculation screen, select Prov Ann Bon under Special.
Enter a method number 1 and press Enter.
Select Calculations from the dropdown list, then select Continue.
Complete Method 1 with the input below:
Method 1
Operator
Input
+
TYP
-
PER
+
(VAL) 1.000
M
ONE
+
MC2
Click Continue.
On Methods of Calculation screen, select Prov Ann Bon under Special.
Enter a method number 2 and press Enter.
Select Calculations from the dropdown list, then select Continue.
Complete Method 2 with the input below:
Method 2
Operator
Input
+
E011
-
YTPB
M
TRI
/
ONE
M
FOUR
+
MC3
NOTE:
Change the method code in the first line to align with the payroll field you store the bonus value. In the example above, the Fixed Salary (E011) is the guaranteed bonus.
Click Continue.
On Methods of Calculation screen, select Prov Ann Bon under Special.
Enter a method number 3 and press Enter.
Select Calculations from the dropdown list, then select Continue.
Complete Method 3 with the input below:
Method 3
Operator
Input
+
FOUR
L
(VAL)0.0001
+
MC4
+
MC5
Click Close.
On Methods of Calculation screen, select Prov Ann Bon under Special.
Enter a method number 4 and press Enter.
Select Calculations from the dropdown list, then select Continue.
Complete Method 4 with the input below:
Method 4
Operator
Input
-
FOUR
+
(VAL) 0.0001
TIP:
To change the operator to a minus on the first line of this method, enter +++, then press Enter to select.
Click Continue.
On Methods of Calculation screen, select Prov Ann Bon under Special.
Enter a method number 5 and press Enter.
Select Calculations from the dropdown list, then select Continue.
Complete Method 5 with the input below:
Method 5
Operator
Input
-
FOUR
+
FOUR
Click Continue.
Click Cancel, then Cancel again, to return to the Main Menu.
You can now link the employees to the method of calculation on the Method Linking screen, or use Global Activation.