All the salary types used in Procountor are categorized into different salary categories. The salary category acts as a search criteria for salary types and salary reports. The salary category in itself does not determine the functionality of the salary type.
The salary type classification in Procountor’s new Payroll section is adapted from the Fully Integrated Payroll (FIP) payroll reporting codes of the Real-Time Economy Program.
There are a total of seven salary categories:
- Salary for time worked
- Other taxable earnings
- Fringe benefits
- Tax free items
- Deductions from net pay
- Informative items
These categories can be divided into two top-level categories based on whether the salary types within the category involve taxable earnings items or other items.
Salary for time worked
The Salary for time worked category is mainly comprised of salary types for basic salaries, overtime, and various compensations. The salary category also includes some other salary types that can be counted as monetary salary, such as commissions and production wages.
Other taxable earnings
The Other taxable earnings category is comprised of payroll items that need to be distinguished from salaries but are counted as taxable earnings.
This salary category contains performance-based items, such as performance and other bonuses. Annual holiday pay, holiday bonus, and holiday compensation as well as salary types for paid time off are also included in this salary category. Salaries paid for time comparable to working time refer to training time wages, emergency work compensation, and waiting time compensation, for example.
Other salaries counted as income from work may include meeting fees, initiative fees, compensation granted on the basis of service years, dividend based on work effort, and athletes’ wages.
Fringe benefits refer to taxable items that do not increase the amount of net salary payable but increase the amount of earnings subject to withholding tax. Fringe benefits are grouped into their own salary category.
Tax free items
Tax free compensations are grouped into their own salary category. These compensations must be reported to the Incomes Register on the earnings payment report, which means that they can be handled in Procountor salary calculation. Tax free compensations are not, however, included in taxable earnings, nor are they subject to insurance.
A separate salary category has been implemented in Procountor specifically for the handling of taxes. This salary category only contains three tax-related salary types: withholding correction, tax at source correction, and tax paid abroad.
Deductions from net pay
The Deductions from net pay salary category includes salary types that reduce the amount of net salary in the salary slip. The handling of these deductions must take into account whether or not the item in question is mapped to an income type defined by the Incomes Register.
Procountor’s salary types also include deductible items that do not need to be reported on the earnings payment report to the Incomes Register. These items still need to detailed on the employee’s pay slip either at the initiative of the employer or at the employee’s request. A good example is the Trade union fee salary type, which is not reported to the Incomes Register but is a fee that must, at the employee’s request, be withheld by the employer from the salary and paid to the union.
The Informative items salary category contains salary types that require special handling. Some of the informative salary types are used to help in salary calculation, while some salary types provide data required by the Incomes Register.
The Salary for insurance purposes salary type, for instance, enables the employer’s side expenses to be calculated correctly and the salary data to be reported to the Incomes Register.
The Unjust enrichment salary type is used in the procedure to correct salary data.
The Tax at source deduction salary types enable corrections to be made to earnings subject to tax at source to ensure that the amounts are calculated correctly. In addition, the salary type allows the tax at source deduction to be reported to the Incomes Register.