Cumulative Tax System
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CUMULATIVE TAX
SYSTEM
The purpose of the PAYE system is to ensure that an employee's tax liability is spread out evenly over the year.
To ensure that this is achieved, PAYE is normally calculated on a cumulative basis
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Employer duty - Tax
• When employee commences work, employer notifies
Inspector of Taxes and applies for a TDC
• Employer duty to ensure they have either a TAX
DEDUCTION CARD P13/P14
Methods of Tax deduction
• PAYE tax deductions are calculated using one of the following methods:
1.
Emergency Basis
2.
3.
4.
Temporary Basis
Cumulative Basis
Non-Cumulative Basis (Week 1/Month 1 Basis)
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Cumulative
• The tax to be deducted in a particular week or month is the cumulative tax due from 1 January to that date, reduced by the amount of tax previously deducted.
• The cumulative system operates for both tax credits and standard rate cut-off points.
• Any tax credits and/or standard rate cut-off point, which are not used in a pay period, are carried forward to the next pay period within that tax year.
• Manual Replaced with electronic
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Electronic TDC
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Electronic TDC
• Click http://www.revenue.ie/en/business/paye/e-taxdeduction-card.html
• Select the appropriate TDC link
• Complete the Employee’s details
• Upon entering the Tax Credits and Cut-Off Point from the
Tax Credit Certificate, Select the 'Calculate' button
• The TDC can be saved on your PC
