Understanding YEA
Global Payroll for Japan provides rules that satisfy statutory and business requirements for calculating and reporting YEA on the final salary or bonus payment. In addition, it provides rules for calculating and reporting independent YEA when an event that affects a payee's annual income tax occurs after the YEA adjustment.
When you run the YEA process on the final salary or bonus, the system calculates for each payee the difference between income tax that is withheld and the income tax on actual earnings and settles this tax difference in the final payment of the year. For independent YEA processing, where the tax difference represents an underpayment of income tax, the system carries over the tax difference as a deduction to be taken in the first payment of the following object year. If the tax difference represents excess withholding of income tax, the excess amount is refunded to the payee at year end. You can carry over this amount to the next year.
This section discusses:
Delivered YEA elements.
Viewing delivered elements.
Tax difference carryover for independent YEA.
YEA reports.
Self-service YEA data collection.
YEA data collection through printed reports.
Global Payroll for Japan delivers these elements for processing year-end adjustments:
Deduction elements YE TAX DIF and YE TXDIF CY.
YE TAX DIF represents the tax difference amount that the system calculates during YEA processing. YE TX DIF CY represents the tax amount difference that is carried over to the next year for employees who are subject to independent YEA processing.
Process lists, JPRADJSAL, JPRADJBON, and JPRADJIND.
Use the applicable payroll process list to run the YEA process for salary or bonus, or for independent YEA adjustments.
You can run a delivered query to view the names of all delivered elements that are designed for Japan. Instructions for running the query are provided in the PeopleSoft Global Payroll
When the tax difference that is calculated for an independent YEA represents an underpayment of income tax, the system uses the deduction element, YE TXDIF CY, to carry over the difference to the next object year. When you run the regular payroll process for January (using process list JPRSAL), the system deducts the amount from the payee's earnings. If the tax difference is greater than the payee's earnings in January or cannot be deducted from the January salary, the tax difference is carried over to the next month, until the deduction is taken.
By default, refunds are not carried forward but are paid to employees in the last payment of the year. To carry over refunds, set the value of variable YE VR CYOVR FLG to 1 (one).
The system reports the tax difference that is carried over on the YEA payslips, the Withholding Tax Register report, and the Tax Difference Carried Over from the Previous Year report.
After year-end adjustments are complete and you prepare your data tables, you can generate these reports to complete the YEA business process:
Withholding Tax report (GPJPYE01).
Withholding Tax/Wage Payment report (GPJPYE01).
Legal Payment Summary report (GPJPYE02).
Wage Payment Summary report (GPJPYE03).
Tax Difference Carried Over from the Previous Year report (GPJPYE06).
Global Payroll for Japan supports both a paper exchange method and a self-service method for collecting YEA data from employees.
If your organization licenses PeopleSoft ePay and PeopleSoft eProfile, you can collect YEA data from employees through self-service pages. The process for collecting and reviewing self-service YEA data includes these steps:
The payroll administrator specifies the time period in which employees can update data through the self-service transaction.
Employees access a main YEA Information page in ePay.
From that page, they access other pages where they can review and update this YEA data:
Employee tax information, such as head of household, disability information and eligibility for Income Amount Adjustment Deduction.
Employee personal data information, such as name, address, and birth date. (Available only if your organization also licenses eProfile.)
Dependent tax information, such as relationship and disability types.
Life insurance and personal pension insurance information.
Nonlife insurance, social insurance, and small enterprise mutual aid insurance information.
Spouse special deduction information.
Housing loan special deduction information.
Payroll administrators review the data and accept it or notify the employee to revise it.
(Optional) The payroll administrator prints the Dependent Deduction report and Insurance and Spouse Special Deduction report for record-keeping purposes.
Payroll administrators perform the following steps to collect YEA data using printed reports:
Print and distribute the following two forms on which employees manually enter their YEA data:
Dependent Deduction report.
Insurance and Spouse Special Deduction report.
Collect the completed forms from employees.
Use these forms to enter data into Global Payroll for Japan income tax and YEA tables.
Retain the completed forms for record-keeping purposes.