Excludable Earnings and Pretax Deductions

The Tax History table (F06136) stores a summary of the tax calculations that are required to produce Payment Summary forms at the end of the tax year. Payment summaries must include an employee's taxable salary. In Australia and New Zealand, taxable salary is calculated in this way:

(Taxable Salary) = (Gross Earnings) − (Excludable Earnings)

To ensure that the system reports the correct taxable salary on Payment Summary forms, all pretax deductions and excludable earnings (which can be benefits or pay types) must be set up correctly. To specify that a pay type or benefit is excludable, or that a deduction is a pretax deduction, you must set up the PDBA to use input number 6.

When you set up PDBAs, you should set up all excludable benefits, regardless of whether they are taxable, as taxable cash benefits. You can then use Tax Calc Input number 1 to determine whether the benefit is taxable. This table provides several examples of how you might set up tax information for PDBAs:

PDBA Type	Set Input 1	Set Input 6	Notifiable
ETP Nontaxed (pay type)	No	Yes	No
ETP Deceased (pay type)	No	Yes	No
Termination Lump Sum D (pay type)	No	Yes	No
Superannuation Sacrifice (deduction)	Yes	Yes	No
Union Deduction (deduction)	No	No	Yes
Pretax Car Deduction (deduction)	Yes	Yes	Yes
Meal Monies (benefit)	No	Yes	No
Bonus (benefit)	Yes	No	No
Nontaxable Car Allowance (benefit)	No	Yes	Yes
Tool Allowance (benefit)	Yes	Yes	Yes
Uniform Allowance (benefit)	Yes	Yes	Yes

Note: All termination lump sum PDBAs except Lump Sum D are subtracted from taxable salary when the Payment Summary is printed. Therefore, you do not need to set up PDBAs for these payments as excludable.

Before you can set up tax information for a PDBA, you must set up any PDBAs that the organization uses to create employee DBAs.

See "Setting Up Deductions, Benefits, and Accruals" in the JD Edwards EnterpriseOne Applications Human Capital Management Fundamentals Implementation Guide.