Bonus Provision

Question

Good day, 
 This is the first year that I have needed to include in my payroll tax provision for the annual bonus. 
 How do I go about adding this to the employee's pay screen? 
 Your help with regard to applying this to my payroll would be greatly appreciated. 
 Many thanks,

Leigh Nel · Answer

Good day Carleen 
 
 Some companies allow employees to elect to pay extra tax toward the bonus throughout the year, and not only when they receive their bonuses. 
 This feature is called Provision for Tax on Annual Bonus and requires the user to ensure the provision for tax amounts are correctly entered on the payroll, to calculate the correct tax amount. 
 If provision for tax on annual bonus was not applied correctly, it could result in higher tax (if the employee did not provide enough during the tax year) or tax refunds (if the employee over-provided during the tax year) in February / when the employee contract is terminated. 
 How does it work? 
 Basically, the guaranteed bonus amount is divided by the number of processing period during the tax year, and the portion is added to the taxable income on the TAX screen of an employee. This increases the monthly remuneration in each month with a portion of the bonus remuneration, but the employee is not taxed on the full bonus amount on payout. At the end of the tax year, the employee would have provided sufficient tax during the tax year. 
 Click here for more information on this feature, and how to apply in your payroll. 
 Take note : If this feature is not applied correctly on the payroll, it can result in possible tax issues at the end of the tax year. 
 We strongly recommend that you book a consultant to review your tax provision setup in your company, assist in setting up automated provision calculations and write provision reports to track your provision throughout the year. Click here to book a consultant.

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Bonus Provision

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