Why does a new employee not pay tax but he is earning above the tax bracket?
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Why does a new employee not pay tax but he is earning above the tax bracket?
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Why does a new employee not pay tax but he is earning above the tax bracket?
If you have just started Harvester and you are not starting in month one(ie January) and you would like the Accumulative Tax history to reflect correctly at year-end, then please do the following for each employee on the Edit Employee page. (note these days with the required, monthly paye submission to ZRA and no Annual paye submission requirements to ZRA, it is not as essential for the Annual return)
On this page look towards the bottom left for two fields called:
1) Taxable Income: Previous Employment
and
2) Tax Deducted: Previous Employment
Enter the Accumulated Totals for both the Gross tax and the tax paid(if any) in the respective fields above.
This is also good practice if a new employee joins your company somewhere during the tax year but not in January(month One).
Note: PAYE is calculated NOT on a monthly basis, but on Cumulative Amounts:
This example is with a first tax bracket of K3000.
If an employee earned K2500 (gross taxable after allowed napsa deduction) in January he will pay NO tax, but if in February he earns K3500 he will still NOT pay tax because his cumulative-tax-bracket is only K6000.(K2500 + K3500)
This is still not above the cumulative-tax-bracket. (2 Months BY K3000)
If the employee earned K3500 gross taxable in January(month 1) and K3500 in February, then he will pay tax in both months because his cumulative-tax-bracket is K7000.(K3500 + K3500)
So it is possible to pay NO tax even if an employee earns more than K3000 in the current month if the current month is not the first month in the tax year, which is January.
eg: If I earn nothing in January, then in February I will need a gross income of above K6000 before I will pay tax. This means that even an amount of K5000 earned in the month of February will not attract tax.
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