On the Accrual (Deduction) Type (create) form, in addition to accrual or deduction types, you can create a payroll tax and contribution types to be used in payroll calculation. For details on accrual and deductions types, refer to Adding an Accrual or Deduction Type.
For each tax or contribution type, you can specify how the amounts of this type should be calculated: by using a formula or as sum of specific base amounts.
On the form, there are two required fields: Description and Type (Accrual, Deduction, Tax, or Contribution).
The "Accrual (Deduction) Type (create)" form
Make sure the correct folder for the new tax or contribution type appears in the Folder field.
In the Description field, enter a name of this tax or contribution type.
<Auto> in the Code field indicates that the system will assign a unique identifier to the new object once you save it.
Then select whether this new object type is Tax or Contribution by using the respective radio buttons. In payroll calculation, any amounts of the Tax type will be calculated as based on the employee earnings, will be paid by the entity and recorded as labor costs, while any amounts of the Contribution type will be deducted from the amounts payable to employees. The amounts of both types will be submitted to the Tax Authority.
In the Tax Type field, select the appropriate type of payroll tax or contribution.
Use the Tax or Contribution Payer buttons to indicate whether Employee or Entity is a payer of taxes or contributions of this type.
Using the Tax or Contribution Calculation Method field, select the method from the following options:
- Percentage of Planned Earnings: If specific percent of earnings listed in the basic accruals and in Employment Contract (and its later changes) should be charged a tax or contribution each period. You will need to select the Has a Base check box and specify the basic accrual types.
- Percentage of Actual Earnings: If specific percent of actual earnings listed in the basic accruals and in Employment Contract (and its later changes) should be charged as a tax or contribution each period. You will need to select the Has a Base check box and specify the basic accrual types.
- Fixed Amount: If a fixed amount is charged each financial period no matter what are the earnings.
The Calculation Rule in the First Month of Employment field appears if Fixed Amount or Percentage of Planned Earnings is selected in the Tax or Contribution Calculation Method field. Use this field to select how this tax or contribution should be calculated in the first month of employment:
- Calculate in Full: To calculate this tax or contribution as for full month.
- Do Not Calculate: To not calculate this tax or contribution in the first month.
- Calculate Proportionally to Worked Time: To calculate this tax or contribution proportionally to days of employment in the first month. This option is not applicable as the Fixed Amount is selected as the calculation method.
Use the Calculation Rule in the Month of Termination field to specify how this tax or contribution should be calculated in the termination month:
- Calculate in Full: To calculate this tax or contribution for the termination month as for the full month no matter on which day of the month termination occurs.
- Do Not Calculate: To not calculate this tax or contribution in the termination month.
- Calculate Proportionally to Worked Time: To calculate this tax or contribution proportionally to worked days in the termination month. This option is not applicable as the Fixed Amount is selected as the calculation method.
Select the Has a Base option if taxes or contributions of this type are calculated using as a base some accrual types (for details, refer to The Basic Accruals (Deductions) pane section below).
In the Additional information text box, you can provide any details on using this tax or contribution type.
The Basic Accruals (Deductions) pane
The Basic Accruals (Deductions) pane appears if you click the Has a Base check box. Here, you can define the new tax or contribution type as based on another accrual or deduction types.
The "Accrual (Deduction) Type (create)" form with the Basic Accruals (Deductions) pane
In the Basic Accruals (Deductions) table, select the accrual and deduction types to used as the base for calculations.
In the Rate column, and specify a rate (weight) for each accrual or deduction type if a weighted sum of accruals (deductions) should be used as a basis for calculation. For instance, to calculate employee's contribution for unemployment insurance, the list of accrual types may include the Basic Salary and Housing Accommodation accrual types.
If the new tax (contribution) type should be used for employees with different accrual types in their Employment Contracts, you will need to list here all these different accrual types. In this case, for a particular employee, the tax (contribution) will be calculated on those of listed here base accruals that are also mentioned in this employee's contract and its later changes.
The toolbar buttons
Click Save to save the entered data, click Save and close to save the tax or contribution type and close the form.
Click the Edit GL Account button to open the Edit GL Account dialog box and view the GL expense account assigned to the tax or contribution type.
The GL Account Edit form for a tax or contribution type
The default expense GL account that appears in the Expense GL Account field is set on the Employees. Default GL Accounts form. However, you can replace this expense account here with another expense GL account if needed.
To apply account change to the accrual or deduction type, click the OK button. To keep the current default GL account, click Cancel.