Payment Dates - Processing payroll in the correct tax year

It is important that payments made to employees are recorded and accounted for in the correct tax year, this can cause issues around year end with the processing of annual leave and business closures. The date that payment is actually made is the determining factor in deciding which year to process the salary.

Revenue guidelines (Section 8.13) state;

‘Tax must be deducted from emoluments earned before 1 January but paid on or after that date in accordance with the tax credits and standard rate cut-off point due and the tax rate applicable at the time the payment is made.’


Therefore, in making the necessary tax deductions the tax credits and standard rate cut-off point (SRCOP) due and the tax rates as applicable at the date of payment and not those applicable to the period when the work was actually carried out. This is so even if all or part of it was earned or treated as earned in a previous or coming income tax year.

In accordance with this regulation each annual version of CollSoft Payroll operates based on that corresponding tax years' rules, thus restricting the use of payment dates to those falling within the relevant tax year, i.e. 2019 CollSoft Payroll, operating tax in accordance with the tax legislation in place for 2019, only accepts 2019 payroll dates.

If payment is made to an employee on or after 01st January 2019 then this payroll must be calculated in line with the 2019 tax legislation (applying the tax credit certificate in issue as at 01st January 2019 and the 2019 tax rates), and so, all such payments to employees should be processed in 2019 CollSoft Payroll.