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Why is the non-recurring tax recalculated during settlement of the payroll run?

A recalculation of the non-recurring tax can occur if an employee’s calculated annual income changes in connection with settling a payroll run. This is usually due to an automatic recalculation of the employee’s annual leave conditions.

 

The reason step by step

The sequence of events that can lead to an adjusted non-recurring tax is as follows:

  1. Automatic holiday calculation If you use the setting to automatically recalculate annual leave during settlement of wage (for employees with coinciding holiday earning year), a new calculation is made of both the number of holiday days and the average employment rate for the earning year. This setting is found under Settings > Payroll > Payroll runs.


  2. The value of annual leave changes The new calculation of the employment rate during the earning year can in turn affect the value of holiday pay and holiday increment for annual leave taken in the current payroll run. You can find these details under the Holiday tab in the employment register.


  3. Calculated annual income is adjusted When the value of the holiday allowance changes, the employee's calculated total annual income is also adjusted. Sometimes this adjustment may cause the annual income to pass a threshold for non-recurring tax, which means a higher tax rate must be applied.

  4. The non-recurring tax is recalculated To ensure that the correct tax is deducted and to avoid tax arrears for the employee, the system automatically recalculates the non-recurring tax based on the new, updated annual income.


Please note: This article is AI-translated. This means that linguistic errors or misunderstandings may occur.