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For monthly salaries, why is there a small discrepancy between the IRD printed tax tables, and the figures calculated by Ace Payroll? |
| This is the issue raised by our client
- Their employees are paid Monthly and on the M code.
- As an example, one earns $4,121 gross per month. Ace Payroll taxes this at $981.84, and the tax calculator on the IRD website also says $981.84.
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The IRD Monthly Printed Tables show a lower amount.
IRD Response
When comparing the Payroll specifications calculations with our paper-based PAYE tax tables you will find a small variance, when the earnings of the employee are in between the value shown in
the paper PAYE tax tables. We advise employers using manual payrolls that where the exact amount of earnings is not shown in the table to use the nearest lower gross value.
As the monthly tax tables gross earnings are in $5 increments
using your example an employer using a manual payroll would deduct PAYE on $4,120 ($980.37).
The formulas used in our Payroll specification are more accurate and should be used by all employers using a computer software payroll package.
I confirm the calculation you have shown is correct when using a computer software payroll package.
| Note: This answer was written by the IRD on 26th April 2004, and the answer is current as at 5th January 2010. |
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