PAYE EXERCISES

Digital Encyclopedic Tech Ltd

PAYE Formula Reminder

Gross Salary = Basic Salary + Allowances

Taxable Income = Gross Salary - Employee Pension

Net Salary = Gross Salary - PAYE - RSSB - RAMA

Employer Cost = Gross Salary + Employer RSSB + Employer RAMA

Exercise 1 – PAYE Calculation

Digital Ltd has the following employees:

Employee Basic Salary Transport Housing
John 500,000 50,000 100,000
Alice 800,000 100,000 150,000
Patrick 1,500,000 150,000 250,000

Required

  1. Calculate Gross Salary.
  2. Calculate Employee Pension Contribution.
  3. Calculate Taxable Income.
  4. Calculate PAYE.
  5. Calculate Net Salary.

Exercise 2 – Payroll Preparation

Prepare payroll using the following information:

Employee Gross Salary
Employee A 300,000
Employee B 700,000
Employee C 1,200,000

Required

  1. Calculate PAYE.
  2. Calculate Employee Pension.
  3. Calculate Employer Pension.
  4. Calculate Net Salary.
  5. Prepare Payroll Summary.
  6. State PAYE declaration deadline.

PAYE, RSSB and RAMA Exercise

Rera Ltd is a company operating in Rwanda with five employees.

Employee Basic Salary (RWF)
Employee 1 350,000
Employee 2 480,000
Employee 3 520,000
Employee 4 600,000
Employee 5 750,000

Additional Benefits

Housing Allowance = 25,000 RWF

Transport Allowance = 18,000 RWF

Statutory Contributions

  • RSSB Employer = 5%
  • RSSB Employee = 3%
  • RAMA Employer = 7.5%
  • RAMA Employee = 7.5%

PAYE Rates

  • 0 – 60,000 → 0%
  • 60,001 – 100,000 → 20%
  • Above 100,000 → 30%

Required

  1. Calculate Gross Salary for each employee.
  2. Calculate PAYE for each employee.
  3. Calculate Total PAYE.
  4. Calculate RSSB Employer Contribution.
  5. Calculate RAMA Employer Contribution.
  6. Calculate RSSB Employee Contribution.
  7. Calculate RAMA Employee Contribution.
  8. Calculate Net Salary.
  9. Calculate Total PAYE payable to RRA.
  10. Explain all formulas used.

Interview Questions

  1. What is PAYE?
  2. Who is responsible for remitting PAYE?
  3. What is the deadline for PAYE declaration in Rwanda?
  4. What is the difference between PAYE and RSSB?
  5. What is the importance of payroll?
  6. How do you calculate Net Salary?
  7. What is the role of RAMA?
  8. What penalties may apply if PAYE is declared late?

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