Redirect Taxable Earnings to Other Tax Gross Best Practice

Redirect Taxable Earnings to Other Tax Gross Best Practice

GOAL: To provide an overview of the different considerations for each employee when determining if some earnings should be redirected to OTHER_TAX_GROSS or the bonus method. 

PAYROLL > EMPLOYEE > STATUTORY DEDUCTIONS > EID

The Statutory Deductions screen is used to define statutory deductions (to be deducted from each Employee’s pay) and to override statutory deductions defined at the Employee Group level for an individual Employee. 

**This is intended to handle tax deductions for sporadic payments from secondary groups** 

ROOT CAUSE: This is how to handle very irregular pay and jumps in pay periods. 

When you miss one singular pay in one singular employee group, tax calculations reset as shown under Tax Analyzer and Pay Run Debug file in the Tax Start section (Reset = Y/N variable). 

Redirect Taxable Incomes from Secondary Groups to OTHER_TAX_GROSS = YES

**HRP will redirect taxable incomes from secondary groups to OTHER_TAX_GROSS, overriding the group level SUBJECT ENTITY**

IMPACT: The pay run will assume that only income from the Primary Group is to be repeated every cycle and therefore only the amount of income from the Primary Group will be multiplied out (projected) to the end of the year for S1 Taxation Factor. 

All earnings from other groups will simply be added on top of the projected annual amount of earnings. 

NOTE: Tax Annualization will restart at the first pay after this option is changed (to either Yes or No). 

**The selected option can be cancelled before the next pay run** 

Key Considerations in this Decision Making:

CONSISTENCY is the main consideration here.  

Boards will need to consider what is regular earnings versus something that is REALLY irregular, as you would likely only want to do this for what is very irregular.  

For Example, regular casual positions likely don’t need to be redirected – however it depends on each individual Employee’s situation, as configured under the Employee level settings.  

**Random casual earnings here and there are likely to be more applicable for this**

Frequently Asked Questions:

QUESTION: Would you recommend that all Pay Method 1 or 2 employees have the "Redirect taxable incomes from secondary groups to OTHER_TAX_GROSS?" defaulted to "Yes"???    

The use of this "Redirect taxable incomes" setting becomes a little more technical of a consideration.  

If the employee has more than one Group in a calendar year, it doesn't necessarily mean that the employee needs to have the "other" Group's income directed to Other_Tax_Gross

Example: An employee who has two positions, 50% perm. EA and 50% perm. ECE Groups, then this EE (employee) wouldn't need anything redirected because it's consistent income in both Groups.  

However, if it's 50% EA FTE and very inconsistent casual work, or another common one is a perm. or temp. contract 10-month EE who has summer work too — both situations might warrant setting the "Redirect taxable incomes" to "Yes".

QUESTION: Does it matter if we leave it on and they do not have a secondary group? What are the best practices in managing this process.  

Two things I wanted to mention for this one:

1. It doesn't matter if it's left on if the employee is only in one Group (or was in multiple Groups but has now returned to only having one Group).
2. Similarly to an employee moving around Groups, if an employee does the opposite (moves from having one Group into having multiple Groups) then you'll want to look at this setting again.