A key measure in the 2020 budget plan is to decrease the tax rate on overtime work. This year, the taxation on the first 100 hours of overtime in the year is lowered to 15 percent for those whose basic salary does not exceed €375 weekly. This does not apply to workers in a managerial position.
The Overtime concession opt-out button is found in the Employee Details section of an employee’s profile.
To exempt an employee from the 2020 overtime concession tax change:
- In the left sidebar of Indigo, click Payroll.
- In the Main section, click on Employees.
- Double-click on the employee for whom you want to exempt from the overtime concession tax.
- Click on Edit in the functions bar.
- In the Employment Details section, click on the Overtime Concession Opt Out box.
- Click on Save in the functions bar.
By default, all active employees in your system are opted-in.
The 15 percent tax rate and 100 hour cap is already updated to overtime pay items in your system. Indigo will automatically apply the rate to the first 100 hours of overtime worked and not to the subsequent hours.
Indigo 18.104.22.168 update for using the OT concession tax in particular scenarios
- Calculations cater for situations where employees are exempted from the OT concession tax mid-year. For employees who are opted out of the OT concession tax, their tax paid to date is equivalent of their FSS tax + OT tax.
- When re-calculating payrolls, the system will appropriately calculate employees' taxes and gross pay according to the OT tax concession and employment type statuses set historically during the given pay period.
- The sum of all taxes (OT + share options + FSS + other) is capped at 50 percent of the employee's gross pay value. In cases where the sum of taxes does exceed the 50 percent sum, the FSS tax is adjusted or reduced to fall within the limit.