Related report entities

Note: You do not perform any set up for report entities in Payroll, but Payroll uses report entities when creating tax deductions.

The Payroll application stores pay and deduction history by report entity. When you set up a company in the Human Resources application you can choose to use related report entities. When you use related report entities, Payroll uses the pay and deduction history from all report entities to determine if employees meet the ceiling amount for a tax deduction. There are two benefits of using related report entities:

  • You do not need to create new deductions when an employee moves from one tax reporting ID to another.

  • Employees are not over-taxed if they move from one tax reporting ID to another because their previous deduction balances move with them.

If you choose to use related report entities, HR relates report entities across the entire HR company structure—not only those report entities within a company or country. However, if an employee moves from one country to another, you do have to create new deductions because each country has a different set of tax deductions.

In the U.S., related report entities are related corporations under a common paymaster.

Example 1

Employees in Two Rivers sometimes move from employment in one tax reporting group to employment in another tax reporting group. This happens often enough that Two Rivers decides to use related report entities.

Kori Anderson is a waitress in the Grove Cafe. She earns her nurse's aide license and Two Rivers employs her as a nurse's aide at the Grove Clinic.

Because Two Rivers uses related report entities, Kori's pay and deduction history moves with her when she moves to a new tax reporting group. The result is that Two Rivers does not need to start over with new tax deductions for Kori, even though she is in a new tax reporting group.

Example 2

Two Rivers decides not to relate report entities across their company structure. If a Two Rivers employee, Rose Mackenzie, moves from one tax reporting group to another, it is necessary to start Rose's ceiling tax deductions over. However, because the system has a record of Rose's deductions associated with each previous time record and tax deduction amount, Two Rivers does not need to stop Rose's deductions in the former tax reporting group, nor do they need to add new deductions for Rose in the new tax reporting group.