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Advanced taxation module – calculating the best tax option for your employees

Advanced taxation module – calculating the best tax option for your employees

The payroll system calculates tax and taxation benefits based on taxation laws and ordinances, and the taxation authority’s instructions.  Where these allow choosing among calculation options, the payroll system will calculate the options and automatically choose the one that maximizes employee net income.  Here are two examples;

Payment differentials for previous years

Should payments from the tax perspective be calculated according to the original years or the current payment year?

When calculating tax based on original years produces a higher net salary, differentials are stacked onto earlier years for up to 5 years prior to the current year, otherwise differentials are stacked onto the current year.

Tax benefits for independent savings allocation

Tax benefits on the employee’s deposits into an independent savings allocation include “deductible” benefits and “entitlement” benefits for different parts of the deduction.  A deduction can be shifted into an entitlement or vice versa.  Additional possibilities may also be available for this kind of framework. 

The payroll system will calculate the optimal option from the perspective of net salary.  The system can also be set to determine the optimal employee deposit that maximizes taxation benefits for the employee.

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