The Non-Smoothing Formula is one of the tax calculation methods that is used to calculate taxes (P.A.Y.E.) in the POWERpay Payroll. 

The non-smoothing tax formula:

(a) takes NO ACCOUNT of YTD figures for gross pay or tax deducted;

(b) does not consider what part of the current cycle pay is regular or irregular.

This is how it works:

1. Finds ALL taxable pay in the current cycle. This includes irregular and regular pay, as well as non-cash allowances.

2. Multiplies the figure found in step 1 by the number of cycles in the year (e.g. 12 for monthly).

3. Calculates tax on the yearly estimate found in step 2.

4. Divides the yearly tax found in step 3 by the number of cycles in the year.

Special Case – Vacation Pay

The only special case is for employees receiving vacation pay in advance. For this, the user must enter a V NOC line, indicating the

amount of vacation cycles the employee is proceeding on. The system will then:

1. Find ALL taxable pay in the current cycle. This includes irregular and regular pay, as well as non-cash allowances.

2. Divide the figure found in step 1 by the number of vacation cycles entered plus 1.

3. Multiply the figure found in step 2 by the number of cycles in the year (e.g. 12 for monthly)

4. Calculate tax on the yearly estimate found in step 3

5. Divide the yearly tax found in step 4 by the number of cycles in the year

6. Multiply the single-cycle tax found in step 5 by the number of vacation cycles entered