Page 31 - F1 Integrated Workbook STUDENT 2018

Features of Taxation and the Regulatory Environment

8.2 Benefits of PAYE

The benefits of having a PYAE system are:

 Tax is collected at source, hence taxpayers are less likely to default payment.

 Tax authorities receive regular payments from employers – helps to budget
cash flows for the government.

 The tax authority only has to deal with the employer, rather than a number of
individuals.

 Most of the administration costs are borne by the employer, instead of the
government.

You will not be assessed on the calculation of employment taxation but you
should have a general appreciation of how an entity deals with taxation with
regard to employees. To give this appreciation a proforma has been included
overleaf for illustration purposes.

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