If an employee is paid fully, or partly in USD, then the employee is taxed using the USD tax table. The total amount of tax calculated is then split, in the proportion of each currency.

If the introduction of the new currency happens during the course of the tax year setting up a tax split will help to separate periods that were taxed in ZiG from those periods that will now be taxed using the USD tax tables.  This makes reporting simpler. To do the tax split follow these steps:

Step 1: Setting up the Tax Table

1. Go to the 'Setup', then 'Tax', then 'New' menus

2. Enter the tax bands as shown below

:Note: The 'Effective Date' of the tax table should be the first of the month of the tax split.  The 'Pension Deductible' is currently USD3,000 per annum, prorate this amount based on the proportion of the number of months left in the year.

Step 2: Applying the tax tables to employees

To apply the new tax settings to employees in bulk, take the following steps:

1. Click on the 'Data', then 'Bulk Routines', then 'Employee Master File Changes' menu options

2. Tick on 'Tax Method' and select 'FDS Forecast'.

3.Tick on 'Tax Table Type' and select 'USD'

4.Tick 'Payslip Currency' and select 'ZiG Dollar'

3. Click on 'Apply to All'

4. Click 'Yes'

5. Enter your admin Username and Password in order to proceed.

6. Click 'OK”'to close.

We now need to setup the USD currency.  To do this:

1. Go to the 'Setup', then 'Currency' menu options.

2. Click on 'Insert' and choose USD as the currency

3. Enter 1 as the conversion rate, then Click 'Ok'.

4. Select your existing ZiG Dollar currency

5. Click 'Change', then type in the calculated ZiG rate, which is 1 divided by the RBZ Interbank rate. Notice that we keep the long number of decimal places for accuracy.

6. Click 'Ok'

Note: The United States Dollar will then become the base currency.

To change the default currency requires the involvement of the payroll Administrator.  To do this:

1. Select the 'Data', then 'Support Menu', then 'Currency Changes' menu options

2. The Administrator needs to enter their Username 'Name' and 'Password' to authorize the changes.

2. Select the 'Currency Changes' tab

3. Select United States Dollar on 'Change Currency To'

4. In the 'Apply Changes to' box ensure that only the 'Default Payroll Currency Type' option is tagged.  Remove the tags below it since not all Transaction Codes, for example, are paid in USD.

5. Click on 'Apply', then 'Close'.

Continuing from above, we now we now change selected Transaction Codes to USD, to do this we largely repeat the process, as follows:

1. Select the 'Data', then 'Support Menu', then 'Currency Changes' menu options

2. The Administrator needs to enter their Username 'Name' and 'Password' to authorize the changes.

2. Select the 'Currency Changes' tab

3. Select United States Dollar on 'Change Currency To'

4. In the 'Apply Changes to' select 'Transaction Codes', then press 'Filter'

5. Tag the Transaction Codes that are to be denominated in USD.  This would include Basic, PAYE Calculated, Tax Credits, Tax Levy, Tax Refund, Negative Pay, Rounded Pay Recovery, Net Pay Recovery, and Net Paid

5. Click on 'Apply', then 'Close'

To enable the use of Multiple Currencies:

•Go to the 'Setup', then 'Global Defaults' menu options

•Select the 'Currency' Tab

•Ensure that all the Check Boxes are ticked, since this is a multi-currency payroll

•'Reports in Foreign Currency' allows reports to be printed in the currency you select at the time of printing

•'Use Multiple Currency Rate of Pay' allows you to specify which currency of Basic Pay in the Employee Master.  It also allows you to put more than one basic rate of pay in the Employee Master, one for each currency.

•'Display Exchange Variance on reports' allows to the display of Exchange Variance on the Multicurrency Journal brought about by rounding.

•'Split PAYE and Net Pay by currency proportion' splits the tax payable into the currencies that were earned.

Decimal Places

We also need to enable the payroll to handle the number of decimal places that the conversion of currency produces.  To do this:

1. Go to the 'Setup', then 'Global Defaults' menu options

2. Select the 'Processing' tab, then

3. Change the decimal places allowed to 10, as shown in the picture below.

Note: we select a large number of decimals to enable accurate calculations of converted amounts.

We now need to update the Employee Master Records indicating which employees are being paid in ZiG Dollars, a foreign currency, or in more one currency.  To do this:

•Go to the 'Edit' and then 'Employee Master' menu options

•Select the employee that is being changed

•Go to the 'Pay Details' Tab

•Click the ellipsis button against 'Rate of Pay'.  Press 'Insert' to add a rate of pay in a selected currency.  

Note: If some employees are earning only one currency and others are earning multiple currencies then these groups of employees need to be in separate payrolls for tax purposes.  The first group would be taxed in ZiG $ using ZiG tax tables, the second group would be have all earnings converted to US Dollars and taxed in US Dollars.

The NSSA Transaction Code is setup in the normal way.  Enter the 'Period Limit' (the NSSA ceiling) and 'Threshold' in ZiG amounts.  For the current period the system will automatically convert the ZiG amounts into the foreign currency equivalents using the interbank rates set for that period.

In subsequent periods make sure that the Interbank Rates are current. See the notes, above, on how to do this.

Then, when the 'Calculation Routine' enter the current 'Period Limit' and 'Threshold' in ZiG.

Screen

In this way NSSA is being computed using valid interbank rates for the period being processed.

Belina PayrollHR gives the User the opportunity of viewing reports in either the foreign or local ZiG Dollar currency amounts. To have reports display in the the selected currency simply place a tick against 'Reports in Foreign Currency' and select the currency from the drop-down menu.