The FDS Forecast method was an alterTo use either of the FDS methods employees should have been employed within the organization since the beginning of the tax year.
Method 1 - FDS Forecast Method - Summary Explanation
The FDS Forecast Method takes the income to date, then adds to that amount a projection of the current income to the end of the year.
Method 1 - FDS Forecast Method - Detailed Explanation
Action
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The Forecast Method of calculating PAYE takes:
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Result
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Calculate
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Calculate the number of periods left to the end of the tax year
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Periods (A)
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Start
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Earnings to date (including the current period and net of deductions)
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Earnings to date (B)
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Add
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Forecasted monthly earnings to the end of the year based on taxable earnings
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Earnings to date / Periods to date X Total periods (C)
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Equals
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Total Income (D)
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Total forecast Income (D = B + C)
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Calculate
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Calculate the annual PAYE payable on the Total Income (A) (using the ZIMRA Annual Tax Tables) (E)
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Annual forecast PAYE (E)
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Calculate
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Calculate Aids Levy on PAYE (F)
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Annual forecast Aids Levy (F)
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Calculate
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Total annual tax payable (E + F = G)
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Total forecast annual Tax Payable (G)
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Deduct
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Credits from previous periods (H)
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(H)
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Deduct
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PAYE deducted to date (I)
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(I)
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Calculate
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Amount of PAYE to be paid by the end of the year (J)
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(J) (G - H - I)
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Calculate
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Average PAYE for each period left in the tax year
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(K) (J / A)
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Deduct
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Current months credits
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L
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Add
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Current Aids Levy
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M
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Equals
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PAYE for the current month
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K - L + M
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Example figures to follow: Setup an example with
Basic, Overtime, Allowance (Regular), Allowance (Irregular), Incentive Bonus (not projected)
Pension, NSSA
Motor Vehicle benefit
Loan Benefit (loan with zero interest)
Annual Bonus
Medical Aid
Disability Credit
DEFAULT
The FDS Forecast Method is the default projection method used by Belina Payroll HR. At year end employees that had been in their first year of employment and on the Traditional Method of calculating PAYE will be automatically placed on the FDS Forecast Method.
Suspended Employees
Any employee that is suspended for one or more periods or re-engaged during the tax year should be removed from the FDS method of calculating tax and put on the PAYE method.
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