The Apply Taxes Rule is used to apply taxes to employee pay. The rule triggers the application to calculate the amount of taxes deducted from gross pay.
The application determines which taxes are applied to earnings based on the earning code, the employee's residential address, and the address of their workplace. Each earning code is configured so that Dayforce determines the details of the taxes applied, such as what percentage of income tax is applied for an employee making $45,000 annually, based on the relevant legislation.
For Canadians, taxes are applied based on their work location's address. Their home address isn’t considered.
Important: Every ruleset needs to have an instance of the Apply Taxes Rule added in order for the application to calculate and apply taxes.
There are specific tax rules for UK and Australian employees:
Apply Taxes Rule Parameters
As of this release, the application displays unnecessary parameters for the Apply Taxes Rule; although these parameters are displayed, they aren’t used by the application. To configure the application to deduct taxes from employee earnings, you need to add the Apply Taxes Rule to each ruleset but don’t have to define values for any of the parameters.