POWERpay Payroll - Montserrat Income Tax Calculation
The method of tax calculation will be shown using an example. The example is for a monthly paid employee for Delta Petroleum.
Image 1 below shows the payroll that was done for the employee for November 2019 and was provided by the customer.
1. HRplus Results
The data entry was done similarly in HRplus and the payroll was run. The results produced by HRplus are shown in Image 2.
2. HRplus Tax Calculations
The income tax calculation shows what was deducted for the employee by Delta Petroleum and also what was deducted by HRplus.
3. Look-Up Tax Table
Reference is made to Image 3 above. We use the look-up table and find the taxable earnings which is $9523.20. The exact amount is not on the tax table and so the next higher value is used. This is $9600.
Then under the column for a tax allowance of $15000 we find that the income tax due on $9600 is $2318.
Notice, however, that the income tax for $9500 with $15000 tax allowance is $2288.
Now $9523.20 is in between $9500 and $9600 and we recognize that the income tax deducted by HRplus, $2294.46, is also in between $2288 and $2318.
We expect that the look-up table is only an approximation and is not an exact calculation as HRplus will provide.
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