How does the system calculate a gross up portion?
This applies to all PaySpace editions.
The system calculates gross-ups as follows:
1. Calculate gross-ups after all other components:
When calculating the gross-up portion, the system will take into account other taxable income to ensure that the employee clears the gross-up input value that has been posted. This means that the gross-up portion is not only made up of tax on the input value but might also include any additional tax increase as a result of the gross-up input.
Note! The employee’s net in this scenario always clears the gross-up value that is posted.2. Calculate gross up before other components:
With the below company setting enabled, the gross-up portion calculation does not take into account other taxable income on the payslip i.e. the tax on the gross-up is calculated in isolation. This means that the gross-up portion result is only made up of tax on the input value, and will not include any additional tax increase as a result of the gross-up input.
Note! The employee’s net in this scenario will not always clear the gross-up value that is posted.The above two calculation methods are driven by the below company setting:
Navigate > Configuration > Payroll > Payroll Config > Calculation Settings > Gross ups
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