--- title: How To Setup Tax Mode. description: Follow these steps to set how the system should compute your tax. --- [Skip to content](https://support.seamlesshr.com/how-to-setup-tax-mode#main-content) English Show submenu for translations [More support](https://support.seamlesshr.com/kb-tickets/new?hsLang=en) ![Logo-1.png\]](https://support.seamlesshr.com/hs-fs/hubfs/Logo-1.png?height=25&name=Logo-1.png) Open main navigation Close main navigation - English Show submenu for translations - [More support](https://support.seamlesshr.com/kb-tickets/new) - Go to seamlesshr.com Go to seamlesshr.com Welcome. How can we help you? - There are no suggestions because the search field is empty. 1. [Knowledge base](https://support.seamlesshr.com/?hsLang=en) 2. [Seamless Payroll](https://support.seamlesshr.com/seamless-payroll?hsLang=en) 3. [Admin](https://support.seamlesshr.com/seamless-payroll?hsLang=en#admin) # How To Setup Tax Mode. ## Follow these steps to set how the system should compute your tax. 1. Launch the SeamlessPayroll Module 2. Click on Payroll Settings and scroll down to tax mode to click 3. Enable the automatic tax mode to allow the system to compute tax or Disable it to input your fixed tax amount on employee paygrades 4. Set your tax mode to "Monthly" or "Annual".  Using the Monthly tax mode enables the system to compute all monthly taxable earnings inclusive of taxable extra pay. While the Annual tax mode would use the Annual Gross Salary of the employee to compute the annual tax and divide by 12 to get the monthly tax. The Annual tax mode will not consider any extra pay that is not in the annual gross of the employee. 5\. Enable the FIN. ACT 2020 or Disable to use the old act. 6\. Choose "Pay Month" or "Monthly" for the tax mode for accruals. Accruals speak to allowances that accumulate due to their frequency of payment. A quarterly allowance paid in the third month of each quarter will accumulate for the first and second months before its paid in the third month. Tax mode on accruals enables the admin to define when the system should compute tax on such allowances. Either in the month it is paid "Pay Month" or on the accumulated monthly value.   7\. Enable or disable updates in CRA. Updates refer to extra pay.  Enabling this feature would make the system remove all taxable extra pays from the calculation of CRA. 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