Add, Edit or Delete a Deduction

Overview

If you need to deduct amounts from employees in Payroll (eg Child Support or Super Salary Sacrifice) they first need to be configured in Config > Payroll > Deductions. 

Deductions are region-specific, so if you have more than one region enabled in your portal, you will need to set the region when a deduction is created. 

For steps on how to set up deductions for New Zealand, please see this article. 

Add a Deduction Item

To add a deduction item:

1. Go to Config > Payroll > Deductions > Add New Deduction.

2. If prompted select a Region > Create new Deduction. This popup window won’t appear if you only have one region enabled in your portal.

3. Enter the relevant details for the deduction item.

4. Click Save.

Refer to the table below for more information on the settings you will need to configure.

Name	The name of the deduction item as it will appear on employee pay advices.
Calculation Type	The Calculation Type that you select for the deduction item determines how the deduction amount is calculated. There are two Calculation Types: Fixed Value will deduct a specified dollar value when the deduction is added to an employee pay Percentage (%) will calculate a specified percentage of either gross or net wages when the deduction is added to an employee’s pay. You will also be able to specify which pay items are included in the percentage calculation using the ‘applies to’ checkboxes.  To make the deduction available to assign to users, ensure that the Enabled checkbox is ticked. You will also need to enter a Start Date. The Finish Date is optional.
Deduction Limit	Each deduction item you create needs to be set with a Deduction Limit. There are three options: Unlimited does not apply a limit, and when the deduction is assigned to an employee, it will continue to be deducted without restriction.  Amount Limit will set a maximum value for the deduction. When the deduction is assigned to an employee, amounts will only be deducted until the total amount deducted reaches the Amount Limit. Pay Periods allows you to set a number of pay periods for which the deduction will apply. When the deduction is assigned to an employee, the amount will only be deducted for the fixed number of pay periods set here. Important: Once a deduction item is saved, you will not be able to change the Deduction Limit setting. You can set multiple rates, percentages or limits within the deduction.
Deduction Type	Select from Standard, Super Deduction, PAYG Tax, Union Fees, or Workplace Giving. The option to set the deduction as Pre Tax will appear for all Deduction Types except for PAYG Tax.
Protected Earnings	A minimum net amount that an employee must earn before the deduction will apply. This can be set as a percentage or fixed dollar value.
Date range applies to	Pay Period will include the deduction in the pay period that includes the Start Date that has been set. Pay Date will include the deduction in the first pay run with a pay date that falls after the Start Date that has been set
Super and Taxes	Checkboxes to configure whether the deduction should be applied pre-tax, and whether it exempt from super and Payroll Tax.
GL Export Details	Set the Expense and Liability account codes for the deduction item.
Payment Summary Settings	Previously used to categorise and report earnings in STP v1.0. These settings are no longer reported as part of your STP messaging.
STP Reporting Settings	Specifies how data will be categorised by the ATO when the deduction item is included in an STP submission. Deductions can be categorised as: Not Applicable Reportable Super PAYG Union Fees Workplace Giving Child Support If a deduction is set as Child Support, you will need to make an additional selection between 'Deduction' and 'Garnishee'. If a deduction is set as pre-tax, you'll see an additional Salary Sacrifice field.  Important: The STP Report Settings fields for a deduction item will lock once that deduction item is included in a pay run that is marked as Paid.
Payroll Tax Settings	Determines whether the deduction item is included in Payroll Tax calculations
Direct Credit Details	Ticking the Direct Credit Payment checkbox includes the deduction in a Deduction Bank File Provide the bank/EFT details that deduction amounts should be paid to, including Bank Account Name, BSB, and Account Number This section will only appear if the Deduction Bank File functionality has been enabled in your portal

Edit a Deduction Item

To edit a deduction item:

1. Go to Config > Payroll > Deductions.

2. Click the name of the deduction item to open the settings page.

3. Update any fields you require and click Save.

IMPORTANT: Once a deduction item has been used in payroll, the Calculation Type and Payment Section fields will lock and cannot be edited.

The Start Date and the Percentage or Fixed Amount set for a deduction rate will be read-only once the deduction item has been assigned to an employee or contractor. 

Delete a Deduction Item

A contribution item can be deleted if it hasn’t been linked to an employee profile or used in payroll yet. 

To delete a contribution item:

1. Go to Config > Payroll > Contributions.

2. Tick the checkbox to the left of a contribution name.

3. Click ‘With selected contribution…’ > Delete.

Re-ordering Deductions

The Config > Payroll > Deductions screen includes a column that lists the Processing Order for deductions. This means that if more than one deduction is assigned to a pay, they will be processed in numerical order from 1 onwards.

The deduction items in a portal can be ordered using ‘Re-order Deductions.

1. Go to Config > Payroll > Deductions.

2. Click ‘Re-order Deductions'. If you have more than one region enabled in your portal, you will be prompted to select which region you would like to reorder in a popup window.

3. Click on each deduction that needs to be reordered and drag it into position. The deduction at the top of the list should be the deduction you would like to be processed first.

4. Click Save.