Payroll Module > Step 2 - Setup Global Parameters

Belina PayrollHR comes with the current tax parameters already setup for you. Thereafter, as revised tax bands are gazetted each year, Belina advise that a downloadable software update is available at http://zw.belinapayroll.com/resources for download. This update will have the latest tax parameters already setup for you to use and include the latest software enhancements for you use at the start of each new year.

Once the software update has been installed implement the new tax parameters by going to the 'Setup', 'Tax', then 'Existing' menu options. Enter the 'Effective Date' of the tables which is the first day of the new tax year e.g. 01/01/2023. Correct Tax setup is critical, at the beginning of each year check the tax parameters to ensure that they agree with ZIMRA announcements.

Tax Setup Menus

When you select 'Existing' the following table displays where you will find the tax parameters for the tax year. Also notice that there are three other tabs where you set up the tax method being used, the P6 fields for Transaction Codes and finally the implied interest rate to be applied to loans for tax purposes, even if your organization chooses a different rate, or no rate at all.

TaxTableTab1a

For a detailed step by step guide through the process of setting up the tax parameters see below:

Detail - Tax Setup

To Setup Tax Table

Click to play

Step 1

Go to the 'Setup' menu, then 'Tax'. To open an existing tax table select 'Existing', or to setup a new table with new tax parameters, which may be valid at a future date then select 'New'. Enter the new tax details together with an 'Effective Date', which would normally be the first day of the new tax year. When this date is reached Belina PayrollHR will automatically activate the new tax parameters.

Step 2

First Tab - Tax Table

Belina PayrollHR comes with the current tax parameters already setup for you. Thereafter, as revised tax bands are gazetted, Belina make available a downloadable program update at http://zw.belinapayroll.com/resources. This update will have the latest tax parameters already setup for you to use.

Example of Tax Tables set up in ZiG currency:

TaxTableTab1a

Example of Tax Tables set up in USD currency:

TaxTableTab1

Check the Tax Parameters detailed with your tax consultant, legislation, or from ZIMRA.

Effective Date	The date that tax parameters become effective (normally the first day of the year). Use the dropdown menu to 'Auto Create Tax Tables'. This is usually done at the after the budget has been released towards the end of the tax year and you have upgraded your software with a version containing the updated tables.
Tax Band Upper Limit	Use the 'Insert' and 'Change' buttons (see keyboard conventions) to enter, or update, the upper limit for each tax band and the percentage tax rate that applies to that band. The upper limit of one band is automatically taken as the lower limit for the next.
Engine Capacity Limit	Use the 'Insert' and 'Change' buttons (see keyboard conventions) to enter, or update, the range of engine capacities and the deemed ZIMRA vehicle benefit.
Tax Credits	Use the 'Insert' and 'Change' buttons (see keyboard conventions) to enter, or update, the types of credits and credit amounts that apply.
Medical Credit %	Enter the Tax Credit percentage that will be applied to medical expenses processed through the payroll.
Tax Free Bonus	Enter the tax free annual bonus amount for the tax year (announced towards the end of the tax year by the Minister of Finance in the annual budget statement).
Loan Benefit	A loan benefit arises where a loan, or credit, exceeding the specified loan amount (currently $100) is given to an employee. The benefit, if any, is deemed to be the difference in the amount of interest charged and the amount that would have been charged if the LIBOR rate plus 5% was charged. A benefit also arises if any amount of the loan is written off. See comment 'LIBOR Rates' below.
Retrenchment	There are tax concessions for those employees that are retrenched. Part of the retrenchment package is tax free. A stated amount is tax free or a percentage of the first $x is tax free which ever is the higher amount.
Deductible Pension	The Finance Act allows pension contributions as a tax deduction. The Pension Deduction is the lower of a specified amount or a percentage of emoluments, which-ever is lower. Enter the amount and percentage.
NSSA Age Limit	Enter 65, the age at which NSSA deductions cease to be made. No NSSA contributions are made from employees that are over 65 year old or who turn 65 during the current tax year.
NSSA Code	Enter, or use the Ellipsis button to look-up, the NSSA Transaction Code
Tax Levy - Aids	Enter the Aids Levy percentage to be applied to the PAYE amount.

To set up bands for the next year

You can set up bands for future tax periods. Simply insert the new 'Effective Date' and enter the new tax bands and other parameters.

To add, change or delete a tax band follow the normal keyboard conventions.

Tax credits

In the past tax credits were only available to employees being taxed using FDS methods of calculating tax. Now tax credits are available to all employees being taxed, pro rata'd from the date of engagement. Setup the credit amounts for Blind, Disabled, and Elderly and the medical credit percentage.

Retrenchment

According to the ZIMRA website :'Section 14 of the Income Tax At (Chapter 23:06) as read with paragraph 4 (p) of the Third Schedule to the same Act exempts the greater of US$5,000 or one third of up to US$45,000 of the amount of any severance pay, gratuity or similar benefit received on cessation of employment due to retrenchment, under a scheme approved by the Minister responsible for labour. The amount determined as legislated will thus not be liable to tax or in other words, will be excluded from the taxable income.'

Explanation (effective for the 2024 tax year only):

Any retrenchment amount up to $9 600 has the first third, ie. the first $3 200 tax free.

Any retrenchment amount from $9 600 to $15 100 has the first third tax free

Any retrenchment amount above $15 100 has the first third of $9 600 tax free only

The tax concession for retrenchment is gazetted each year and is only available to employees that have been retrenched as part of a formal retrenchment exercise approved by the Ministry of Labour.

Important: Before applying any of the above parameters please check the current rates from your tax consultant, legislation, or from ZIMRA

Step 3

Second Tab - Tax Method

Select the default tax calculation method to be used for the tax computations. Choose FDS Forecast, FDS Average or the traditional, non-forecast, PAYE method. The PAYE method would only be chosen if this is the first year in which an organization is operating.

TaxTableTab2

Final Deduction System (FDS)

The Final Deduction System is an approved method of working out the Pay as you Earn (PAYE) taxation deductions to be made on an employees earnings. ZIMRA accept two methods of computing FDS:

FDS Forecast - takes the earnings to date, then adds to this a projection of the current basic and selected earnings to estimate annual income.

FDS Average - averages the earnings to date and projects that average forward to the end of the year to estimate annual income.

New employees

Employees that join an organization have their tax computed using the traditional PAYE method where tax is calculated for the period in question without reference to any prior period income to date, nor any projection of earnings. Employees engaged during the year do not have tax calculated using FDS. Belina Payroll HR automatically puts new employees on PAYE and converts them to FDS at the beginning of the next tax year.

Most payrolls will, therefore, have some employees on FDS (using one of the two methods) and others who joined the organization during the course of the year on PAYE.

•	FDS Allow Calculated Tax Refunds	Tick to allow Belina PayrollHR to refund any PAYE amount that may have been over-deducted during the course of the year. This may occur if PAYE was being computed manually, or by another system, before the implementation of Belina PayrollHR . The result is a positive (addition) to the employee's pay.
•	FDS Aids Levy Optional Forecast	Leave un-ticked - only used in very specific circumstances.
•	No Tax Calculation for Persons Over	Leave un-ticked - only used in very specific circumstances

Step 4

Third Tab - P6 fields

The 'P6 Fields' tab shows the P6 field allocated to each Transaction Code setup in the system. When creating Transaction Codes a default P6 field is allocated to the transaction. These can be amended if necessary.

TaxTableTab3

Check and agree the positioning of the Transaction Codes on the P6 to ensure that they correctly reflect the circumstances in your organization. To change a P6 allocation highlight the Transaction Code and press the 'Change' button. Make and save the change.

Step 5

Fourth Tab - LIBOR Rates

LIBOR (London Interbank Offered Rate) Rates:

Libor Rates are available from the ZIMRA website, currently at : https://www.zimra.co.zw/domestic-taxes/london-interbank-offered-rates-libor

LiborRates

LIBOR rates are announced each working day and come in 15 different maturities (from overnight to 12 months). At 1 January 2020 this ranged from 1.6708 (30 days) to 1.9166% (1 year) maturities. Using a LIBOR rate of 6.92 would therefore be prudent.

To setup the LIBOR rates that apply:

•Go to the 'Setup' menu, then 'Tax'

•Select the LIBOR Rates' tab

•Use the 'Insert' and 'Change' buttons (see keyboard conventions) to enter, or update, the LIBOR rate that applies.

TaxTableTab4

Two tax 'years' in one

If tax rates change during the course of the tax year Belina PayrollHR can accommodate the change. Simply enter the tax parameters for the new tax 'year' and enter the effective date. When doing this make sure that the tax parameters are set as if they were to apply for the full 12 months, even thous in reality they will only apply for some of the periods of the year. As the payroll proceeds from period to period it will automatically pick up and apply the new tax parameters. Printing the ITF16 and P6's is a simple matter of entering the period range applicable.

Convert Payroll to FDS

Follow the steps given in the link, above, to convert a payroll to compute PAYE using the Final Deduction System of calculating tax.

Tax calculations in Belina PayrollHR

What is so special about the tax calculations in Belina PayrollHR

•

We have a facility which we call the 'Tax Display' which gives a full breakdown of the tax calculation that we used in arriving at our PAYE amount. This can be viewed or printed to assist you in following the tax calculation through yourself or with the employee or with another interested third party

•	Our clients have been satisfied with the manner in which the FDS tax audits have resulted in few discrepancies

•	We work closely with ZIMRA on an ongoing basis and have a mutual respect for each other. ZIMRA used our system for some years before aligning their payroll and accounting requirements.

•	We are able to respond to ZIMRA requirements better than competitors that may be based outside Zimbabwe.