How does the Non-Smoothing Formula work?
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
PAYE Calculations for the Non Smoothing Formula
![](https://media.screensteps.com/image_assets/assets/005/123/457/original/acca0275-468a-4d11-b9bc-3cddfdbfee33.png)
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