Adding & Updating Deductions

A payee may request, or may be obligated, to have deductions taken from their gross or net pay. Where this is the case, the relevant deductions must be added to the Payee record so that the relevant deduction amounts will be automatically deducted from the payee’s earnings at the Gross Deductions and/or Net Deductions stages of a pay batch.

A payee's deductions can be added, viewed and modified via the Deductions section on the Payroll > Payee > Payee Maintenance > Payee Entry screen.

The following types of deductions can be applied to a payee:

• standard

• child support

• child support rolling

• extra tax

• workplace giving

• payee superannuation

• union/professional association fees.

Deductions cannot be added, edited or deleted while a payee is included in an open pay batch. However, if you need to add a deduction while the payee is included in an open pay batch you can add an ad-hoc deduction to the payee's pay details within the pay batch.

Deductions that have already been used in a pay batch cannot be deleted because the system needs to retain a history of what affected a payee's pay for each pay period. Similarly, a deduction cannot be edited once it has been used in a pay batch except for its validity end date, which can be set or changed to determine when the deduction is to cease.

When adding a payee deduction, you must specify the following:

• the deduction header to which the deduction is linked

• the validity period of the deduction

• an optional end date on which the deduction is to cease being applied

• the applicable rate type

• the rate value

• whether the deduction is taken from gross or net earnings

• whether the deduction is a rolling deduction

• whether the deduction is net protected

• the name of the superannuation fund into which the deduction will be paid (for payee superannuation deductions only)

• an optional payee account reference.

Deduction Headers

The deduction header to which a deduction is linked determines a number of attributes of the deduction such as the deduction type (for example: child support, payee superannuation) and the bank account into which the deduction is to be paid.

When you add a deduction to a Payee record you must link the deduction to a deduction header. The deduction header defines certain attributes of the deduction such as the deduction type (for example: child support, payee superannuation) and the bank account into which the deduction is to be paid. Therefore, it is important to ensure that you link a payee deduction to the correct deduction header.

Deduction Validity Period

A deduction must have a validity period that determines when the deduction is applicable. The validity period is defined by a mandatory start date and an optional end date. If an end date is not defined the deduction will be applied indefinitely from the start date onwards. An end date can be set at any time after the deduction is created except while a payee is included in an open pay batch.

A deduction is automatically applied in a pay batch if it is valid on the end date of the pay period to which the pay batch corresponds. That is, the pay period end date of the pay batch must fall within the validity start and end dates of the deduction. 

Rate Type & Rate Value

The rate type determines whether the deduction is to be deducted as a fixed amount (for example: $100.00 per pay period) or a percentage of the payee's earnings (for example: 5% of earnings per pay period). If the rate type is percentage based, you must specify if the deduction is calculated based on a percentage of the payee's gross or net earnings.
The rate value specifies the fixed monetary amount or percentage that is to be deducted from the payee's pay per pay period.

Because a payee can be included in multiple pay batches for the same pay period, the system takes into account any prior deductions made during the same pay period. For example, if a payee requires $100 to be deducted from their pay each pay period and the entire $100 deduction is applied in the first pay batch that is processed for a given pay period, that deduction is not applied again if the payee is included in another pay batch for the same pay period. However, if the deduction was based on 2% of earnings (gross or net) rather than a fixed amount, the deduction will be applied each time the payee has any earnings in a pay batch so that the total amount deducted during a given pay period will equal 2% of the payee’s total earnings for the pay period.

It is possible to define a default rate type and rate value on a deduction header so that the same rate type and rate value can be applied to all payee deductions that are linked to the same deduction header. Where this is the case, the rate type and rate value is inherited from the deduction header and cannot be defined or overridden on the payee deduction itself.  

Payee Superannuation Deductions

For deductions of a type of Payee Superannuation, the superannuation fund to which the deducted amounts will be accrued must be selected as part of the process of configuring the deduction. Only those superannuation funds that are defined under Payroll > Payee > Payee Maintenance > Payee Entry > Payee Details Superannuation Details for the payee can be selected on a deduction. Therefore, ensure the relevant superannuation fund had been added to the payee's superannuation details before attempting to configure a deduction of this type.

Unless the payee is exempt from compulsory employer superannuation contributions, the payee's superannuation details will also define an accrual rate for the corresponding fund. That accrual rate is used only when the payee accrues superannuation that is paid by their pay company on top of their earnings, such as any compulsory contributions made under the Superannuation Guarantee scheme or additional employer superannuation contributions. Where a superannuation contribution is accrued as a result of a voluntary deduction from the payee's gross or net earnings, the rate of accrual is determined by the rate value of the deduction instead.

Rolling Deductions

A deduction must be flagged as a rolling deduction if the deduction is to cease once a specified total amount has been deducted from the payee's pay.

Rolling deductions are useful in situations where a payee is required to repay an amount and the repayment is made in a series of installments. The deduction is applied to automatically to deduct the relevant installment amount each pay period and once the total amount is reached the rolling deduction ceases automatically.

Net Protected Deductions

A deduction must be flagged as being net protected if the payee must have a certain amount of their net pay left over after the deduction is taken out of their net pay for a pay period. This amount is known as the net protected amount and can be a percentage of the payee's net earnings for a pay period or a fixed monetary amount per pay period. 

When a payee's pay is processed in a pay batch, a net protected deduction is not applied if applying the deduction would result in the payee's earnings falling below the net protected amount for the pay period. 

The net protection type (percentage or fixed) and net protection amount for Child Support deductions are defined on the deduction header to which the payee deduction is linked and not on the payee deduction itself. This allows the same net protection to be applied to all payee child support deductions that are linked to the same deduction header. Because net protection is mandated equally for most payees who are required to make child support payments, this prevents the need to define the net protection on each payee deduction that references the same deduction header.

Deductions that apply to a payee's gross pay cannot be net protected.

Payee Account Reference

If the deduction header to which a payee deduction is linked specifies that payment of the deduction is facilitated via electronic funds transfer (EFT), an account reference is required to identify the source and purpose of a payment transaction. The account reference is populated against each transaction that is output to an EFT deduction file.

A generic account reference can be defined on deduction headers. That caters for payment scenarios whereby your business pays deductions into a single target account and therefore the account reference identifies, for example, your business as the source of the payment. Alternatively, an account reference can be defined at the payee deduction level so that the account reference that is populated against a transaction in the EFT deduction file can be specific to the payee to whom the transaction corresponds. For example, if a payee salary sacrifices their gross earnings into superannuation, the account reference against the transactions in the EFT deduction file may need to identify the payee’s superannuation fund membership number so that the fund can reconcile the payments against the relevant account on their end.

It is not mandatory to define an account reference on a payee deduction and if not defined, the generic account reference that is defined on the linked deduction header is used to identify the source of deduction payments instead.

Bank Details

If the deduction header to which a payee deduction is linked specifies that payment of the deduction is facilitated via electronic funds transfer (EFT), the deduction header may define the account details of the bank account into which the deduction is to be paid. Alternatively, if the deduction type that the linked deduction header represents must be paid into individual accounts for each payee as opposed to a centralised account, the Apply Bank Details on Payee Deduction option will be enabled on the deduction header in which case it is mandatory to define, at the payee deduction level, the details of the bank account into which the deduction is to be paid. Where that is the case, a Bank Details tab is enabled on the payee deduction and it is mandatory to specify the following information on the payee deduction:

• name of the bank account into which the deduction is to be paid

• BSB number that identifies the financial institution and branch where the bank account is held

• the account number that uniquely identifies the target bank account

• the name of the company or organisation to which the deduction is to be paid.

How to Add a Deduction

To add a deduction to a payee, follow the procedure below.

How to Configure a Rolling Deduction

To configure a rolling deduction, follow the procedure below.

How to Configure a Net Protected Deduction

To configure a net protected deduction, follow the procedure below.

How to View or Edit an Existing Deduction

To view or Edit a payee's existing deduction, follow the procedure below.

How to View or Edit an Existing Deduction
	If you do not already have the relevant payee record open in the Payee Entry screen, search for and open the relevant payee record in edit mode.
2.	Navigate to the Deductions section of the Payee Entry screen and in the list of deductions, click the Edit button next to the deduction that you want to view or edit. The Deduction Details dialog box opens, showing the details of the existing deduction.	Open
4.	If you need to modify the deduction, update the relevant fields on the Deduction Details screen as required.
5.	If you have made any changes to the deduction that you want to apply, click Save. Otherwise, to close the Deduction Details dialog box without saving any changes, click X in the top right-hand corner of the dialog box. The Deduction Details dialog box closes.