GP AUS: Tax Rounding Issue With Tax Scale 4R Australia
Last updated on MAY 16, 2016
Applies to:PeopleSoft Enterprise HCM Global Payroll Australia - Version 9.2 and later
Information in this document applies to any platform.
On: PeopleSoft Enterprise HRMS Global Payroll Australia Release 9.2, Tax Scales
There is a $1 difference when using Tax Scale 4R in PeopleSoft Global Payroll Australia 9.2 calculation and the ATO calculation.
The difference is due to the following reason:
■ According to ATO: For scale 4 no coefficients are necessary. To calculate withholding, apply the tax rate to earnings, ignoring any cents in earnings and in the withholding result.
■ But the Peoplesoft calculation is using the same calculation method as other scales which is:
First divide the sum of the fortnightly earnings and the amount of any allowances subject to withholding by two. Ignore any cents in the result and then add 99 cents. Then work out the rounded weekly withholding amount applicable to the weekly equivalent of earnings, before any adjustment for tax offsets. Multiply this amount by two.
There should not be any differences using Tax Scale 4R in PeopleSoft Global Payroll Australia 9.2 and the ATO calculation.
The issue can be reproduced with the following steps:
1. Use a Biweekly Employee with TFN Status "Not Supplied and Tax Scale 4R" (Global Payroll & Absence Mgmt > Payee Data > Taxes > Maintain Tax Data AUS)
2. Calculate the pay (via Global Payroll & Absence Mgmt > Absence and Payroll Processing > Calculate Absence and Payroll)
3. Check results.
The issue has the following business impact:
Due to this issue, Employees on Tax Scale 4R are getting a $1 difference compared to the ATO's calculation.
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