Tboy
Future world ruler
Just wondering: when tax is calculated, what happens to the fractions of a penny/cent/e.t.c.? e.g. After deducting tax, someone's monthly pay is £1142.46[25] (the [25] is the fraction of a penny).
Tax: what happens to the fractions?
- Thread starter Tboy
- Start date
It's rounded up.
Wasn't there a massive scam involving a guy somehow syphoning off the fractions and making millions?
Yeah, there was. I don't recall a name, but I learned about it in '90, '91 when I was in school. The guy did what they proprosed to do in Office Space, except he knew how to move the decimal point.
Bartleby
Remembers laughter
Superman II?
III, actually, but even that was inspired by the crime I remember being told about. This guy did it in the early 80s, maybe late 70s. Could have even been earlier than that. All I know is that he used COBOL to do it, and he was an employee of the bank. And COBOL's been around since before the Ark, so who knows when it was.
You can look it up, they call it salami slicing.
You can look it up, they call it salami slicing.
Wolfe Tone
Which Way Did He Go?
Superman III, I believe
Bartleby
Remembers laughter
I stand corrected.
Mega Tsunami
Emperor
In Britain your income tax (PAYE) is recalculated on a year to date basis every week or month depending upon how often you are paid.
Thus if you are down a fraction one week, you could be up a fraction the next week and so forth. (You might be paid (say) in 3 consecutive weeks £250.89, £250.89 and £250.90 )
Therefore the only time there is ever a fraction left over is at the end of the tax year.
And any roundings are always in your favour and not the taxmans.
(In fact, for those completing tax returns, any pennies left over are in your favour, not just fractions of pennies).
Thus if you are down a fraction one week, you could be up a fraction the next week and so forth. (You might be paid (say) in 3 consecutive weeks £250.89, £250.89 and £250.90 )
Therefore the only time there is ever a fraction left over is at the end of the tax year.
And any roundings are always in your favour and not the taxmans.
(In fact, for those completing tax returns, any pennies left over are in your favour, not just fractions of pennies).
Irish Caesar
Yellow Jacket
I think US taxes let you round to the nearest dollar.
Lambert Simnel
One across
In the UK, income tax is only calculated on whole pounds earned. Thus it's not possible to have a tax amount due which is not in whole pence. (And the rounding is in your favour - so an annual salary of £50,000.99 is taxed as if you just received £50,000.00.)
As MT says, the approach used for most of us wage slaves is a cumulative calculation, whereby each month the payroll system calculates how much tax you should have paid in total so far this tax year, and deducts how much you've already paid, and thus gets how much you pay this month/week.
Your tax allowances as indicated by your tax code are also apportioned over the year, so the month 7 calculation, for example, will be performed allowing you 7/12ths of your total allowances (both for earnings before being taxed, but also for the amount you can earn at the lower tax rates). This has the effect of making your tax payments equal over the year if your earnings are constant over the year.
If you're on a Month 1 or Week 1 basis, this cumulative calculation doesn't apply, and each pay packet is taxed as if this is the first week/month of the tax year.
As MT says, the approach used for most of us wage slaves is a cumulative calculation, whereby each month the payroll system calculates how much tax you should have paid in total so far this tax year, and deducts how much you've already paid, and thus gets how much you pay this month/week.
Your tax allowances as indicated by your tax code are also apportioned over the year, so the month 7 calculation, for example, will be performed allowing you 7/12ths of your total allowances (both for earnings before being taxed, but also for the amount you can earn at the lower tax rates). This has the effect of making your tax payments equal over the year if your earnings are constant over the year.
If you're on a Month 1 or Week 1 basis, this cumulative calculation doesn't apply, and each pay packet is taxed as if this is the first week/month of the tax year.
GenMarshall
High Elven ISB Capt & Ghost Agent
Normally they round it up to the nearest cent. Thats how Gas stations do since they always list their price with a fraction of a cent. IE: $3.54 1/3
That's not how gas stations work, they don't round like that.
If you bought 10 gallons of gas at $3.54 and 1/3 cent, you wouldn't pay $35.40 for it, you'd pay $35.43. It's just a way to get an extra cent a gallon. May not sound like much, but when you add up the billions of gallons of gas sold each year....
If you bought 10 gallons of gas at $3.54 and 1/3 cent, you wouldn't pay $35.40 for it, you'd pay $35.43. It's just a way to get an extra cent a gallon. May not sound like much, but when you add up the billions of gallons of gas sold each year....
