Examples of Calculation Factors for Payroll Deductions
To illustrate how the payroll run uses calculation factors to calculate different types of deductions, let's look at a social insurance deduction and a national income tax deduction using calculation steps.
Social Insurance Deduction
Employers in many countries or territories deduct social insurance payments from employees and also make contributions. Employee and employer rates are typically different. Such deductions often have wage limits.
The social insurance deduction processor element for this type of calculation might have the following calculation factors:
Employer or Employee Code (Reference Value) |
Calculation Method |
Calculation Step |
Calculation Value Definition |
Values |
---|---|---|---|---|
Employee |
None |
Calculate Social Insurance Employee Rate |
Social Insurance Employee Rate |
4 percent flat rate |
Employer |
None |
Calculate Social Insurance Employer Rate |
Social Insurance Employer Rate |
2 percent flat rate |
Employee |
None |
Calculate Social Insurance Employee Wage Limit |
Social Insurance Employee Wage Limit |
100,000 flat amount |
Employer |
None |
Calculate Social Insurance Employer Wage Limit |
Social Insurance Employer Wage Limit |
100,000 flat amount |
National Income Tax Deduction Using Calculation Steps
A national income tax calculation involves multiple steps. First, it calculates the allowance, then any exemption amount, and then it applies the tax rate.
The following table shows a subset of calculation factors that might be associated with a tax processor element.
Filing Status (Reference Value) |
Calculation Method |
Calculation Steps |
Calculation Value Definition |
Values |
---|---|---|---|---|
Single |
None |
Calculate Region A Allowance - Single |
Region A Allowance - Single |
10,000 flat amount |
Single |
None |
Calculate Region A Exemption Amount - Single |
Region A Exemption - Single |
0 flat amount |
Single |
None |
Calculate Region A Regular Rate - Single |
Region A Rate - Single |
7 percent flat rate |
Married |
None |
Calculate Region A Allowance - Married |
Region A Allowance - Married |
10,000 flat amount |
Married |
None |
Calculate Region A Exemption Amount - Married |
Region A Exemption - Married |
1,000 flat amount |
Married |
None |
Calculate Region A Regular Rate - Married |
Region A Rate - Married |
6 percent flat rate |