Understanding Periodic Tax for Leave Payments on Termination
To calculate periodic tax for leave payments on termination, Global Payroll for Australia averages the earnings over 12 months and then brings the average down to a per period amount by dividing it by the employee's pay period factor (that is, the number of pay periods in a year for the employee). The correct pay period factor for each employee is returned by the formula TAX FM TAX PERIODS (the pay period factor is 12 for employees paid monthly, 52 for employees paid weekly, and so on), and the tax is calculated by the deduction PERIODIC TAX which uses the formula TAX FM PERIODIC to determine the correct tax amount.
If you want to use the periodic tax formulas to calculate taxes on other earnings such as quarterly paid bonuses, you can modify TAX FM PERIODIC and TAX FM TAX PERIODS to suit your specific requirements.
Note: You can define your own pay period factors for periods not defined by PeopleSoft. To do this, modify the formula TAX FM TAX PERIODS so that it includes the factors corresponding to the new periods.
You can override the formula TAX FM TAX PERIODS at the Payee Level.
Global Payroll for Australia also calculates the periodic tax for HELP and SFSS using the formulas TAX FM HELP PERIOD and TAX FM SFSS PERIOD respectively to average earnings over 12 months.
Note: To invoke the periodic tax calculation you need to maintain the PD GRS PERIODIC accumulator. In the case of termination pay, this means maintaining the segment accumulator PD GRS LUMP MARGNL, which contributes to PD GRS PERIODIC. This accumulator contains the leave earnings that are normally paid on termination by means of positive input.