PeopleSoft Global Payroll for Japan 9.1 PeopleBook

Withholding Income Tax

This chapter provides an overview of income tax withholding and discusses how to:

Prepare for income tax withholding.
Process the Withholding Tax Register.
View delivered income tax deductions.

Understanding Income Tax Withholding

Global Payroll for Japan provides rules to calculate and deduct income tax from both salary and bonus payments. It also enables you to calculate income tax for employees with multiple jobs.

Income Tax on Salary

The rules for the KOU type income tax include the following:

Data input pages and elements to calculate the adjusted number of dependents and the dependents deduction.
Elements to calculate net salary pay.
Determination of the tax amount using the calculation formula IN FM SAL MAC KO or the monthly income tax table lookup formula IN FM SAL TBL KO, as specified for each salary payer.

The rules for the OTSU type income tax include the following:

Elements to calculate net salary pay.
Determination of tax amount using the monthly income tax table lookup formula IN FM SAL TBL OT.

Note. Applying dependent deductions to OTSU salary is highly unusual, but is supported by the application.

Income Tax on Bonus

Tax on a bonus is usually calculated based on the previous month's salary. In cases where the bonus amount is more than ten times the previous month's salary, both the previous month's salary and the bonus amount are used to calculate the tax. In cases where the payee received no salary in the previous month, the bonus amount is used to calculate the tax.

The rules for income tax on bonuses accomplish the following:

Determine whether to base the tax on the previous month's salary, both the previous month's salary and the bonus amount , or on the bonus amount itself.
Calculate the adjusted number of dependents for the KOU type.
Determine the tax on the bonus from the KOU or the OTSU bonus income tax rate tables.

Income Tax for Multiple Jobs

The rules for calculating income tax for employees with multiple jobs include the following:

The user must create income tax data for each employment record.
Income tax is calculated by each employment record based on the corresponding income tax data.
Only one employment record can have tax type KOU at a time. On the other hand, multiple employment records can use OTSU and a designated rate.
An employee cannot claim a deduction for the same dependent on multiple jobs at the same time.

Each dependent can be claimed only once per employee.

Prerequisite

Set up salary payer reference numbers, and specify the calculation method for KOU type income tax on the Tax Establishment page.

Preparing for Income Tax Withholding

This section provides overviews of income tax withholding preparation and dependent deductions and discusses how to:

Enter employee income tax data.
Enter dependent income tax data.

Understanding Income Tax Withholding Preparation

Enter the following data into the system before processing income tax withholding:

Enter income tax data for each employee on the Maintain Income Tax Data JPN page.
Enter dependent data.
- Enter dependent identification, relationship to employee, and birth date on the Dependent Data pages in PeopleSoft HR.
- Specify whether the dependent is subject to deduction, whether he or she is a parent living with the payee, and the disability type on the Maintain Dep Tax Data JPN page.

Understanding Dependent Deductions

Global Payroll for Japan recognizes three types of employees from the standpoint of withholding tax. The employee's type is determined by which Dependent Deduction report the employee submits to the organization.

The following table defines each employee type and discusses how to set up data on the Income Tax Data and Maintain Dep Tax Data JPN pages:

Type of Dependent Deduction Report Submitted	Maintain Income Tax Data JPN Page: Income Tax Type field	Dependent Tax Page
Dependent Deduction report for primary salary.	Select KOU.	Enter the dependent data as submitted on the Dependent Deduction report.
Dependent Deduction report for secondary salary.	Select OTSU.	Enter the dependent data as submitted on the Dependent Deduction report.
No Dependent Deduction report submitted.	Select OTSU.	Do not enter any dependent tax information.

Note. The system processes dependent deductions based on the combinations in the preceding table. If you select OTSU as the tax type and define dependent deductions on the Maintain Dep Tax Data JPN page, the system assumes that the deductions are for a secondary salary and calculates deductions accordingly. Do not enter dependent deduction information if you did not receive a Dependent Deduction report from the payee.

Pages Used to Set Up Income Tax Withholding

Page Name	Definition Name	Navigation	Usage
Maintain Income Tax Data JPN	GPJP_IT_PYE_TAX	Global Payroll & Absence Mgmt, Payee Data, Taxes, Maintain Income Tax Data JPN, Maintain Income Tax Data JPN	Enter employee income tax data, such as salary payer number, employee type, and disability information.
Maintain Dep Tax Data JPN	GPJP_IT_DEP_TAX	Global Payroll & Absence Mgmt, Payee Data, Taxes, Maintain Dep Tax Data JPN, Maintain Dep Tax Data JPN	Enter dependent tax data.

Entering Additional Data in Human Resources Records

Entering Employee Income Tax Data

Access the Maintain Income Tax Data JPN page (Global Payroll & Absence Mgmt, Payee Data, Taxes, Maintain Income Tax Data JPN, Maintain Income Tax Data JPN).

Income Tax Type

Select from the following values: Designated Rate, KOU, and OTSU.

For employees with multiple jobs, KOU can be selected only once across all employment records. Otherwise, the system generates an error message. As the system doesn't allow multiple employment records with tax type KOU at the same time, you have to update the current KOU record to a non-KOU value and then update the non-KOU record to KOU.

If the employee type is not KOU, the employee can't update this dependent data on the self-service pages.

Tax Rate

Enter a value here only if you select Designated Rate for the income tax type. For example, enter 0.2 if the designated tax rate is 20 percent.

Relationship to HOH (relationship to head of household)

Select the relationship of the employee to the head of the household. If the employee is the head of household, select Self.

HOH Name (head of household's name)

If the employee is not the head of the household, enter the name of the person who is.

Disability Information

Enter or edit disability information that is provided by employees on the Dependent Deduction report.

Entering Dependent Income Tax Data

Access the Maintain Dep Tax Data JPN page (Global Payroll & Absence Mgmt, Payee Data, Taxes, Maintain Dep Tax Data JPN, Maintain Dep Tax Data JPN).

The selections you make on this page determine the personal exemptions for income tax during year-end processing, as well as for withholding income tax. The application determines the exemptions based on the dependent's birth date and relationship to the payee. This table summarizes the system logic for determining applicable personal exemptions:

Information from Dependent Tax Table	Age as of Base Date	Applicable Personal Exemption
Relationship is Spouse and Subject to Deduction is selected.	Equal to or more than 70.	Elderly Spouse
Relationship is Spouse and Subject to Deduction is selected.	Less than 70.	Ordinary Spouse
Relationship is other than Spouse, Subject to Deduction is selected and Parent Living with Payee is selected.	Equal to or more than 70.	Elderly Parent Living with Payee
Relationship is other than Spouse, Subject to Deduction is selected and Parent Living with Payee is selected.	Less than 70.	Ordinary Dependent
Relationship is other than Spouse, Subject to Deduction is selected, and Parent Living with Payee is not selected.	Equal to or more than 70.	Elderly Dependent
Relationship is other than Spouse and Subject to Deduction is selected.	Equal to or more than 16 and less than 23.	Specified Dependent
Relationship is other than Spouse and , Subject to Deduction is selected.	Equal to or more than 23, and less than 70.	Ordinary Dependent
Relationship is other than Spouse and Subject to Deduction is selected.	Less than 16.	Ordinary Dependent
Any combination other than those specified in this table.	Any age.	Not Applicable

Dependent Detail Information

You must link the dependent tax data with an employment record number. If the employee has multiple jobs, the employment record number that is linked to the tax type KOU on the Maintain Income Tax Data JPN page defaults to the Empl Rcd Nbr field. If no employment record number is linked to tax type KOU, zero is defaulted.

Note. If the relationship of the dependent is changed to ExSpouse in HR, you should deselect the Subject to Deduction check box on this page.

Disability Description

Enter or edit disability information that is provided by employees on the Dependent Deduction report.

Deleting Dependent Tax Data

If dependent tax data exists on this page, it will be orphaned if the dependent data is deleted from the Dependent Information page, unless service operation DEPBEN_SYNC is enabled.

Processing the Withholding Tax Register

This section provides an overview of the Withholding Tax Register and discusses how to run the report.

Understanding the Withholding Tax Register

A PeopleSoft Application Engine process loads the results of Global Payroll calculations into the Withholding Tax Register data table (GPJP_IT_WH_REG) and the Detail Withholding Tax Register table (GPJP_IT_WH_REG2).

A SQR process selects data from the Withholding Tax Register records and from static HR and Global Payroll records and prints the data.

Print a Withholding Tax Register report for an employment record, an employee, or for all employees for a specified salary payer. Run this report after year-end adjustment or at any time during the year.

Note. To include the year-end values on the Withholding Tax Register, you must run the Load YEA Table Application Engine process (GPJP_YEALOAD) before you run this report.

Page Used to Run the Withholding Tax Register Report

Page Name	Definition Name	Navigation	Usage
Inc Tax Withhold Reg Rpt JPN (income tax withholding register report Japan)	GPJP_RC_IT_WHRG	Global Payroll & Absence Mgmt, Taxes, Inc Tax Withhold Reg Rpt JPN, Inc Tax Withhold Reg Rpt JPN	Run the Withholding Tax Register Report (GPJPIT01), which prints payroll data in the following categories: employee identification data, salary data, bonus data, PTO data, former employment data, total amounts data, year-end adjustment data, and retirement allowance.

Viewing Delivered Income Tax Deductions

Global Payroll for Japan delivers the following deductions to process income tax:

Deductions	Description
IN TAX SAL	Income tax (salary)
IN TAX BON	Income tax (bonus)

The PeopleSoft system delivers a query that you can run to view the names of all delivered elements designed for Japan. Instructions for running the query are provided in the PeopleSoft Global Payroll 9.1 PeopleBook.

Income Tax Type	Select from the following values: Designated Rate, KOU, and OTSU. For employees with multiple jobs, KOU can be selected only once across all employment records. Otherwise, the system generates an error message. As the system doesn't allow multiple employment records with tax type KOU at the same time, you have to update the current KOU record to a non-KOU value and then update the non-KOU record to KOU. If the employee type is not KOU, the employee can't update this dependent data on the self-service pages.
Tax Rate	Enter a value here only if you select Designated Rate for the income tax type. For example, enter 0.2 if the designated tax rate is 20 percent.
Relationship to HOH (relationship to head of household)	Select the relationship of the employee to the head of the household. If the employee is the head of household, select Self.
HOH Name (head of household's name)	If the employee is not the head of the household, enter the name of the person who is.