A pay item, 'Tax periods', has been provided with the system to enable pays to be taxed over several periods. If you add the 'Tax periods' pay item to an employee's pay calculation screen, and enter the number of pay periods to spread the tax over in the units field, the tax calculation will divide the total taxable gross by the units entered, calculate the tax due, and then multiple the tax amount by the units to give the tax to deduct in the pay period.
Note that individual payments can have their tax averaged over a number of pay periods, by entering a number of tax periods in that payments Pay Calculation, Payment screen.
In that case, the tax is calculated by calculating first the tax as it would be if the pay did not include that pay item. The value of the pay item is then divided by the number of tax periods and the tax is calculated with that averaged amount added to the gross pay. The tax on that pay item is then calculated by subtracting the tax on the pay without the pay item from the tax calculated on the pay with the averaged pay item and the result is multiplied by the number of pay periods. That tax amount is then added to the amount of tax calculated on the pay without the pay item to become the amount of tax to be deducted from the whole pay including the pay item.
For example, if the monthly pay comprises ordinary pay of of $1,000 and a commision payment of $2,000 earned over 4 months, the tax is first calculated on $1,000, and then the tax is calculated on $1,500 ($1,000 + ($2,000 / 4)). If the tax on $1,000 is $250 and the tax on $1,500 is $400, the total tax for the period will be $850 ((($400 - $250) x 4) + $250). This calculation benefits the employee when the $2,000 commission pushes the employee into a higher tax bracket than they would be if the payment had been paid in 4 instalments of $500.