ZIMRA audit the PAYE tax calculations made for employees each tax year.  This is done retrospectively, immediately after the completion of the tax year, using ZIMRA audit software.  An ITF16 export is prepared and saved to flash drive and taken to ZIMRA offices, or sent by email as an attachment.  This needs to be done  within 30 days of the completion of the tax year.  ZIMRA may also do an interim audit during the course of any tax year.  This is done by extracting the ITF16 export for the year to date which is then used in their audit software.  

Generally there should be no variance between the PAYE amounts computed by Belina PayrollHR and that which is computed by ZIMRA.  The audit may, however, determine that Tax adjustments are necessary.

Adjustments

If adjustments are required to the year end ITF16 this would normally entail adjusting the PAYE amount for selected individuals.  To do this first process the amount of the adjustment as a Prior year adjustment to PAYE and Prior year adjustment to Levy so that the ITF16 and P6 information agree to the correct PAYE amount determined by ZIMRA.  Then secondly process the impact of the adjustment of the prior year in the current payroll.

The impact - Over deduction

If ZIMRA determine that there was an over deduction of PAYE the employee should have the tax refunded.  This entails reducing the PAYE figure in the prior year so that the total PAYE figure agrees with the ZIMRA amount.  Then process a non taxable tax refund in the current period.

The impact - Under deduction

If ZIMRA determine that there was an under deduction of PAYE then the employee should pay the tax that should have been paid.  This entails increasing the PAYE figure in the prior year and processing a PAYE adjustment in the current period increasing the PAYE amount being deducted.

Method

The PAYE adjustment does not affect the current year FDS tax computations.  By using the 'Tax - PAYE Adjustment (Previous)' Transaction Category these transactions are included in tax when the Calculation Routine is run.

Current Period - Use the Transaction Code, created above, to process the adjustment in the current period.  If there was an over deduction of PAYE in the prior tax year then refund the amount by processing a positive amount.  If there was an under deduction of PAYE in the prior tax year then process the deduction from the employee as a negative amount.

Prior Period - Adjust the PAYE amount in the last period of the previous tax year.  This is done by following the instructions given under the topic 'History Data'.