How do I make changes to the payroll to accommodate the Final Deduction system for Lesotho?

As from Release 5.5b, The application made provision to accommodate Lesotho tax country companies with the implementation of a Final Deduction System (FDS).

Under the FDS, the employer is required to withhold the correct amount of PAYE and to decrease the need for reassessment of tax liabilities by the LRA. Any overpayments and underpayments of PAYE should happen through the payroll.

Under the FDS, the employer can:

• apply an accurate YTD PAYE calculation using actual YTD values, and

• deduct employment related expenses incurred in the production of employment income to calculate chargeable employment income.

In line with this, the LRA has published a new P19 for 2020/2021 which must be submitted with the FDS Monthly Reconciliation Form.

The FDS must be applied in the 2020/2021 tax year going forwards.

To accommodate the changes to activate the YTD PAYE calculation, we made the following amendments in the system:

• Company
• Company Miscellaneous 
• ‘Use the Average Tax Formula’ option has been enabled and may now be selected.

When you <Save> this screen, you are given the option to recalculate. You may say <Yes> or <No> to this option.
 NOTE: All new employees will now automatically be set to the Average Tax formula.

When you do a Start of Period into the final Pay Period for the Tax Year at the end of March, you MUST apply the Average Tax Calculation to all existing employees. 

The following steps will allow you to apply the calculation to all employees. From the Main Menu, select:

• Payroll 
• Global Activation 
• Average/Normal Tax

This will ensure that all employees have ‘Use the ‘Average’ Tax calculation’ option selected (ticked) on the Employee Tax Screen, accessed from any employee screen:

NOTE: If you have not already set your employees to the Average Tax Calculation and if they have a fluctuating taxable income, they may pay more tax than usual in their final tax period, even if their taxable income is less than usual in their final tax period.