Tax at Source Rate determination |
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Calculation of rate-determining income for several employers Nothing changes for part-time employees who have no other employer or substitute income sources in the new 2021 income tax regulation. Your reduced workload has no influence on the rate-determining income. For part-time employees with one or more other employers and/or substitute income sources, this workload must be reported to their employer. If the level of employment at the other employers is unknown, the rate-determining income is always calculated at 100%, which is usually the worst solution for the employee.
Example A The rate-determining income corresponds to the income tax base. Other known income sources | deactivated Level of employment at other income sources | 0.00
Example B Part-time employee with a workload of 80% and another employer (workload with the other employer unknown) Withholding tax base is converted to 100% for the rate-determining income. Withholding tax base / 80% x 100% Other known income sources | activated Level of employment at other income sources | 0.00
Example C Part-time employee with a workload of 80% and another employer (workload with the other employer is 10%) Withholding tax base is converted to 90% for the rate-determining income. Withholding tax base / 80% x 90% Other known income sources | activated Level of employment at other income sources
Example D Part-time employee with a workload of 80% and another employer (workload with the other employer is 30%) Withholding tax base is converted to 110% for the rate-determining income. Withholding tax base / 80% x 110% Other known income sources | activated Level of employment at other income sources | 30.00
If the level of employment at the other employer is unknown, but the amount of the wage and/or the substitute income source is known, the level of employment must be determined (converted) in relation to the main occupation. If the employee has several other employers, various levels of employment (workloads) must be added up and entered in the ‘Level of employment at other income sources’ field.
Rate-determining income from hourly salary
The aim of this change in income tax regulations is to make so that rate determination is based on the total level of employment.
In case of multiple jobs on hourly pay, monthly percents by position with your own employer as well as percents by position with other employers must be determined. For hourly salary earners, most customers record, for example, 100% or an average percentage applicable according to the employment contract in the Percents by position field under the Wages tab. To calculate rate-determining income, workload should be determined every month based on the hours worked (actual hours).
Rate-determining income is only converted if employee also works for another employer.
To make the calculation, SwissSalary takes into account average monthly hours (monthly parts) and the ‘actual hours’ worked during the month.
Example: On average, an employee works 182 hours for employer A. 182 hours are entered in the ‘Wage’ tab under ‘Monthly parts’. In May, the employee works 35 hours for CHF 25.00/hour. For employer B, the employee works for 30% of working time.
To determine the workload in May, the calculation is as follows:
100 / monthly parts x actual hours = 100 / 182 x 35 = 19.23%
The total workload is 49.23% for May (employer A = 19.23% + employer B = 30%).
The income earned from employer A is now converted into total workload for rate-determining income:
actual time worked for employer A x hourly rate / percents by position with employer A x total workload = 35h x CHF 25.00 = CHF 875 / 19.23% x 49.23% = CHF 2,240.05
The rate is searched for in the rates table based on the rate-determining income of CHF 2,240.05. Withholding tax deduction of CHF 875.00 is then made from the wage subject to withholding tax using the calculated percentage.
NOTES - Make sure that your wage types (reported number of hours and absences) are always set up correctly with assignment to correct time type and ‘actual time’ balancing. - Employees are obliged to quickly report changes in workload with other employers to their main employer so that correct extrapolation can be made. - If the workload or workloads with another employer or other employers are unknown and cannot be determined, just check the ‘Other known income sources’ box. IMPORTANT: In this case, the rate-determining income is ALWAYS extrapolated to a workload of 100%, which in most cases is not in employee’s interests. - Workloads or percents by position determined this way have nothing to do with the indication of part-time employment in a regular salary certificate. The percentage recorded in the Employee card will be shown on the salary certificate as of December 31 or taken into account as of the date of resignation. |