Tax calculation
The detailed planning Tax calculation determines payroll and tax expenses such as FICA, SUTA, CPP, and EI calculations as required in the U.S.A. and Canada. The calculation recognizes the concept of annual applicable maximums and exemptions because in most cases only a portion of earnings is taxable.
Parameters
- Applicable source value: Select Value to enter a numeric value; selecting any of the others presents a list of the currently defined objects of that type. The options are Value, Attribute, Calculation, and Global Vector.
- Rate: The rate used in the calculation. The options are Value (defaults to 0.00%) and Attribute.
- Annual maximum applicable value: This parameter is always spread to the months using the cumulative method and must always contain a positive value. The options are None, Value, Attribute, Calculation, and Global Vector.
- Exemption application method: How the annual exemption is spread:
- Pro-Rata: Turns on the Exemption spread factor option (see below).
- Cumulative: Turns off the Exemption spread factor option and the spread factor is set to Spread Evenly.
- Annual exemption value: If this value is a vector, each monthly value will be used to spread and calculate the exemption value for each month. This parameter must always contain a positive value. The options are None, Value, Attribute, Calculation, and Global Vector.
- Exemption spread factor: Only enabled if Annual exemption value is set to Pro-Rata. The options are Spread Evenly, Calculation, and Global Vector.
- YTD adjustment amount: This parameter must always contain a positive value. When non-calendar fiscal years are used, the parameter needs to be populated because the exemption amounts are based on calendar years. If you use non-calendar, then it is necessary to pre-load the YTD salary amounts for each employee. The options are None, Value, and Attribute.
Examples
A basic tax calculation
With Maximum, Exemptions, or YTD amounts, taxes are calculated using the formula: Result = Source x Rate.
| Jan2018 | Feb2018 | Mar2018 | |
|---|---|---|---|
| Applicable source value | 1,000 | 1,100 | 1,200 |
| Rate | 5% | 5% | 5% |
| Calculation Result | 50 | 55 | 60 |
A more complicated tax calculation
The Annual maximum applicable value, the Annual exemption value, and the YTD adjustment amount are all used.
| Mar2018 | Apr2018 | May2018 | ... | Oct2018 | Nov2018 | Dec2018 | |
|---|---|---|---|---|---|---|---|
| Applicable source value (Global Vector) | 10 | 10 | 10 | 10 | 10 | 10 | |
| Formula 1: Exemption Vector = Exemption value x Exemption spread factor | 1 | 1 | 1 | 1 | 1 | 1 | |
| Formula 2: Source after exemption = Max(Source value - F1, 0) | 9 | 9 | 9 | 9 | 9 | 9 | |
| Formula 3: Accumulated value = F2 + Lag1(F3) | 9 | 18 | 27 | 72 | 81 | 90 | |
| YTD amount (Value = 20) | 20 | 20 | 20 | 20 | 20 | 20 | |
| Formula 4: Accum after YTD = F3 + YTD | 29 | 38 | 47 | 92 | 101 | 110 | |
| Formula 5: (Max Accum = 100 - Annual exemption amount = 88) = Min(F4, Max Accum) | 29 | 38 | 47 | 88 | 88 | 88 | |
| Formula 6: difference = F5 - Lag1(F5) | 9 | 9 | 9 | 5 | 0 | 0 | |
| Calculation Result (rate = 10%) = F6 x Rate | 0.9 | 0.9 | 0.9 | 0.9 | 0.8 | 0.0 |
A tax calculation with a cumulative exemption value
Tax is calculated using the cumulative exemption application method.
| Mar2018 | Apr2018 | May2018 | ... | Oct2018 | Nov2018 | Dec2018 | |
|---|---|---|---|---|---|---|---|
| Applicable source value (Global Vector) | 10 | 10 | 10 | 10 | 10 | 10 | |
| E1: Exemption Value | 15 | 15 | 15 | 15 | 15 | 15 | |
| E2: Accumulated exemption = Lag1(E2) + Lag1(F1) First value = YTD amount | 0 | 10 | 15 | 15 | 15 | 15 | |
| E3: Max. Exemption = Max(0, E1-E2) | 15 | 5 | 0 | 0 | 0 | 0 | |
| Formula 1: Exemption Vector = Max(0, Min(Source, E3)) | 10 | 5 | 0 | 10 | 5 | 0 | |
| Formula 2: Source after exemption = Max(Source value - F1, 0) | 0 | 5 | 10 | 10 | 10 | 10 | |
| Formula 3: Accumulated value = F2 + Lag1(F3) | 0 | 5 | 15 | 65 | 75 | 85 | |
| YTD amount | 0 | 0 | 0 | 0 | 0 | 0 | |
| Formula 4: Accum after YTD = F3 + YTD | 0 | 5 | 15 | 65 | 75 | 85 | |
| Formula 5: (Max accum = 80 - Annual exemption amount = 65) = Min(F4, Max Accum) | 0 | 5 | 15 | 65 | 65 | 65 | |
| Formula 6: Difference = F5 - Lag1(F5) | 0 | 5 | 10 | 10 | 0 | 0 | |
| Calculation Result (rate = 10%) = F6 x Rate | 0 | 0.5 | 1 | 1 | 0 | 0 |