Comparing Credit Notes for Period-Based and Voucher Withholding
Credit notes for period-based withholding are accounted for during withholding and payment calculations and therefore reduce the amount of the withholding for a given payment. Here are some incremental examples using the following constants:
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Period balance for basis amount is 600.00 EUR.
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Withholding rate is 10%.
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Period balance for withholding amount is 60.00 EUR (600.00 × .10).
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Payments are made within the same period, June 2006.
Payment #1:
Payment #1 pay cycle is dated June 1, 2006.
| Voucher # | Applicable? | Basis Amount | Withholding |
|---|---|---|---|
|
00000100 |
Y |
250.00 |
25.00 |
|
00000101 |
Y |
–50.00 |
–5.00 |
Result: Payment is for 180.00 EUR to the supplier and the withholding is 20.00 EUR.
Payment #2:
Payment #2 pay cycle is dated June 8, 2006.
| Voucher # | Applicable? | Basis Amount | Withholding |
|---|---|---|---|
|
00000102 |
Y |
100.00 |
10.00 |
Result: Payment is for 90.00 EUR to the supplier and the withholding is 10.00 EUR.
If you add the basis amounts for the first two payments (250.00 EUR + 100.00 EUR = 350.00 EUR) you are less than or equal to the period balance of 600.00 EUR. The system does not include the credit amount when calculating the basis amount totals. The 10% withholding rate still applies (350.00 EUR × .10 = 35.00 EUR). The withholding is 10.00 EUR (35.00 EUR − 25.00 EUR [withholding taken for the first voucher] = 10.00 EUR). The system does not include the credit withholding amount when calculating the withholding amount totals.
Payment #3:
Payment #3 pay cycle is dated June 15, 2006.
| Voucher # | Applicable? | Basis Amount | Withholding |
|---|---|---|---|
|
00000103 |
Y |
250.00 |
25.00 |
|
00000104 |
N |
−50.00 |
0.00 |
Result: Payment is for 175.00 EUR to the supplier and the withholding is 25.00 EUR.
If you add the basis amounts for the three payments (250.00 EUR + 100.00 EUR + 250.00 EUR = 600.00 EUR) you are less than or equal to the period balance of 600.00 EUR. The system does not include the credit amount when calculating the basis amount totals. The 10% withholding rate still applies (600.00 EUR × .10 = 60.00 EUR). The withholding is 25.00 EUR (60.00 EUR − 25.00 EUR [withholding taken in the first payment] − 10.00 EUR [withholding taken in the second payment] = 25.00 EUR). The system does not include the credit withholding amount when calculating the withholding amount totals. Because the period balance for the withholding amount is 60.00 EUR and the withholding amount taken is 60.00 EUR, no additional withholding is calculated on the credit voucher 00000104.