The Ministry of Finance published the revised draft Disaster Management Tax Relief Bill and draft Disaster Management Tax Administration Relief Bill on 1 May 2020.  Part of this proposal is to increase the limit of the allowable tax deduction in regards to donations towards the Solidarity Fund.

There is currently an Allowable donations transaction in Pastel Payroll that updates the tax total 4030, however this code should not be used for the donations towards the Solidarity Fund.  Donations towards the Solidarity Fund will need to be reported against a new IRP5 code, 4055 that is not available in Payroll as yet.  If your employees wish to make a donation toward the Solidarity fund, we advise that you create a new Transaction Template and Transaction to accommodate for this. 

Once the Tax Total 4055 becomes available you will need to you update this template with the Tax Totals.

NOTE: These transactions will not limit you to the percentages that is in the proposed bill, so it is important that you regulate the donation amount and only process the maximum allowable percentage on this new transaction, please reach out to your tax practitioner for more details regarding this.

Method:

1. Click on Setup
2. Click on Transaction Templates
3. Click on the New icon:
4. Enter any code between 1000 – 4999 in the Code field (I will be using 2000).
5. Enter the Description as Donation – Solidarity Fund
6. In the Template Type drop down, select Deduction Tax-deductible:
   
7. Click on Calculation Totals at the bottom right hand side:
   1. Check the Tax-deductible Amounts Check box:
      
   2. Click on OK
8. Click on the Tax Totals option at the bottom right hand side of the screen:
   1. Check the Tax Total 4497 Total Deductions/Contrib. check box:
      
   2. Click on OK
9. Save this Template and close the transaction template screen.
10. A Progress Indicator will run as the template is added to the Tax Total – please be patient.
11. Click on Setup
12. Click on Transactions
13. Click on the New icon:
14. Enter any code between 1000 and 4999 in the Code field
15. In the Template Field add in the new template code that you created above (I used code 2000).
16. Enter the Description as Donation – Solidarity Fund
17. Save the Transaction

If your employee will be donating more than the allowable tax deductible deduction, we advise that you create a second transaction for the amount that is higher as the tax deductible allowance and process the difference on this code.  A guide for a non Tax Deductible Template and Transaction can be found here.