The Final Deduction System (FDS) is a method of calculating the amount of PAYE payable in each period.
The method takes the actual earnings for the periods to date and projects the income for the remaining periods taking into account any tax deductions and credits that may apply. It then calculates the amount to be paid in PAYE for the current period based on this calculation.
As the year progresses the calculations are based more and more on actual figures and there is less projection, until in the final period the calculation is purely based on actual figures. This means that in the final period the total PAYE deducted for that period will ensure that the total deducted for the year is equal to the amount that should have been deducted for the year. When the ITF16 is submitted to ZIMRA for audit there should Nil PAYE payable or receivable.
For further information about FDS tax methods see: Tax Methods
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