With changes in legislation came the need for businesses to adapt their operational procedures. One of these changes, which went into effect at the beginning of 2023, pertains to reporting non-taxable income on payslips. The new Regulation on the Content of Payroll, Compensation, or Severance Payment Calculations (Official Gazette, No. 68/23) provides clear guidelines on how employers should handle non-taxable receipts and disclose them on payrolls.
First and foremost, it’s important to note that employers must adjust their payroll documents by October 1, 2023, to align with the new regulations.
All payments made after this date must be documented on the latest payroll. This change aims to enhance transparency and provide employees with better information regarding their earnings.
According to the Labor Law, employers must provide employees with a detailed breakdown, within 15 days from the payment date, of wages, compensation, severance pay, or unused annual leave, indicating the methodology for calculating these amounts.
The most important change
The most significant change concerning reporting non-taxable income on payrolls relates to Article 93, paragraph 4 of the Labor Law. According to this article, employers must report on the payroll the total amount of due and paid benefits that employees accrue based on their employment but are not considered as regular salary, including benefits such as transportation from home to work, rewards for work performance, fixed meal allowances, and similar non-taxable employee benefits.
Calculating these employment-based benefits, which do not constitute regular salary, should include providing information about the types and amounts of benefits employees acquire through employment and specifying the period during which these benefits were paid (year, month, or multiple months).
It’s important to note that the legislator has categorized these benefits into taxable and non-taxable, and employers must report them on the IP1 form.