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Tax Averaging |
  
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Tax Averaging |
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Tax averaging is a concept designed to make sure the right amount of tax is paid for an employee who receives bonuses and commissions throughout the financial year.
e-PayDay® offers two forms of tax averaging
1. Tax averaging over the whole year
2. Tax averaging period to date, progressive basis
If this bonus/commission is a one-off and probably the only time that this employee will receive a lump sum amount of money outside of their normal pay within the same financial year, then tax averaging over the whole year is the recommended option.
See Tax averaging over the whole year
Examples: Performance bonus at the end of financial year
Christmas bonus
If the bonus/commission is relatively frequent and occurs a number of times throughout the financial year, then tax averaging period to date, progressive basis is the recommended option.
See Tax averaging period to date, progressive basis
Examples: Commissions earnt by salesmen, real estate agents etc