Tax Is Calculated Incorrectly For An Employee With Special Tax Code (STC)
(Doc ID 2008161.1)
Last updated on FEBRUARY 23, 2019
Applies to:Oracle HRMS (New Zealand) - Version 12.1.3 and later
Information in this document applies to any platform.
On : 12.1.3 version, New Zealand Payroll
Tax is not calculated correctly for an employee with Special Tax Code.
Employee's "PAYE Information" details:
Tax Code: M
Special Tax Code: Yes
Tax Rate: 0.29
ACC EP Special Rate: 0
Student Loan Special Rate:
All Extra Emol at High... No
Payroll processed for period which results in:
Ordinary Pay 4245.35
PAYE Tax Deduction 1231.15
The tax calculation instruction on Special Tax Code as per the IRD Specifications:
Special Tax Code - PAYE calculations
Sequence Task Associated Rules
1 Calculate employee's pay amount for pay period
2 Truncate pay period amount to
whole dollars, eg $457.89 becomes $457
3 Calculate total amounts to be deducted Multiply pay period amount
by rate on the certificate
4 Truncate amount to whole cents
These specifications can be found on Page 55 of the IRD Spec Document for 01 April 2015 to 31 March 2016
So as per the above, the tax should be:
Step 1: Ordinary Pay 4,245.35
Step 2: Truncate the amount 4,245
Step 3: Calculate the tax (Multiply pay period amount by rate on the certificate) 4,245 x 0.29 = 1231.05
Expect tax to be calculated based on instruction for Special Tax Code as per IRD Specifications.
The issue has the following business impact:
Taxis not calculated correctly for employees with STC tax code as per the legislative requirements.
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