The following illustration shows the PAYE Calculation Checklist for the month of August for an employee who benefits from tax-on-tax and receives a taxable housing benefit. In this example, the accommodation is unfurnished, therefore the housing benefit is calculated at 10%.
According to the Income Tax Act, a housing benefit is considered taxable when an employer provides accommodation to an employee. The taxable value of the accommodation depends on the following:
• 15% of the employee’s total emoluments if the accommodation is furnished
• 10% of the employee’s total emoluments if the accommodation is unfurnished
Follow the steps below to verify the PAYE Calculation Checklist:
Check the Pay Period: In this example, the PAYE Calculation Checklist is for the month of August
Check the section “Your PAYE Particulars”: In this example, the employee has submitted an EDF, is a Citizen of Mauritius and benefits from tax on tax.
Step 1: Check the Emoluments for the month, for example: Salary, Overtime, Project Allowance and Commission.
Step 2: Check the Total emoluments paid in previous months, which in this example refers to the July emoluments, since the PAYE Calculation Checklist is for the month of August.
Step 3: Tax benefit
Step 4: Check the Housing benefit which is calculated at 10% of the Total emoluments, since the accommodation is unfurnished therefore, the amount is added to the employee’s emoluments.
Step 5: Check the Total emoluments including taxable benefits which comprises of the Emolument of the month, Total emolument of previous month and the Housing benefit.
Step 6: Ensure that the employee’s Reliefs and Exemptions are correctly applied according to his EDF.
(110000 * 2 / 13) + 0 + (0 * 1) are illustrated via 6(a–c) and correspond to the following:
6a → 110,000 shows that an EDF was submitted in August with a total exemption of Rs 110,000.
6b → 2 corresponds to August, which is the 2nd month of the fiscal year.
6c → 13 represents the fiscal year running from July to June, which includes 13 months because of the end-of-year bonus.
Step 7: Ensure that the Chargeable income corresponds to the difference between the Total emoluments (including taxable benefits) and the Less Reliefs and Exemptions.
Step 8: Progressive scale
Step 9: Tax on Tax
Step 10: Check the Tax paid in previous months, which in this example refers to the July tax, since the PAYE Calculation Checklist is for the month of August.
Step 11: “Tax to be withheld in the month” represents the difference between the Tax Charged (PAYE) and the tax paid in previous months.