Summary

Deductions are amounts that are deducted from an employee's pay.

Fields

Type:

This field is primarily used for reporting purposes. It cannot be changed once the record has been saved.

• D. Standard deduction

  This code is used for the majority of deductions. Any deduction that does not meet the criteria of the other deduction types should be coded as a "D. Standard deduction".

  Note: Selecting this option enables the Details (iii) | Superannuation deduction field. You would use this option for 'other member' superannuation and salary sacrifice deductions.

• U. Employee Superannuation Deduction

  This code is used for employee superannuation deductions. It ensures that the values will appear on the appropriate superannuation reports.

• I. Insurance Deduction

  This type of deduction is used to deduct wages for benefits or workplace packages such as medical insurance.

Taxable:

This field cannot be changed once the record has been saved.

• Yes

  Deduction is taken off before the tax on the gross pay is calculated. This makes the deduction a pre-taxable deduction.

• No

  Deduction is taken off after the gross pay is taxed. The deduction is a post-tax deduction.

  Note: In Australia, you can claim a tax credit for "work-related expenses" only at the end of the tax year.

Rank deduction:

This Yes/No field determines whether the Rank field is enabled so the deduction can use ranking.

Rank:

This field is enabled when Rank deduction = “Yes” so you can enter a rank for the deduction. The Rank field can contain up to 2 alphanumeric characters.

Deductions apply ranking in the following order:

• Numeric - If a deduction has Rank = 0, then Exolvo reads it as Rank = 00, and deducts it before a deduction with Rank = 1, which it reads as Rank = 01.
• Uppercase letter
• Lowercase letter
• Blank (or the “space” character)
• Unranked or <Null> - Unranked deductions are always processed last.

  Note: If multiple deductions have the same Rank value, they are deducted in Code order. If an employee has multiple transactions for the same deduction (same Code value), they are deducted in the order they were added to the pay.

If you do not use ranking, deductions are processed in the following order:

1. PAYE (including ACC Earners’ Levy)
2. Student Loan (standard repayment amounts only)
3. Child support
4. Taxable deductions before non-taxable deductions, except if a payroll rule applies.
5. All subsequent deductions are made in Code order. For example, 100 – Club Fee is deducted before 200 – Alternate Bank Account.

Exceptions: In NZ, child support and other attachment orders are subject to Protected net earning rules. This is means that the order becomes

1. PAYE (tax only)
2. Child support
3. Other attachment orders; e.g.

• IRD arrears orders (Section 157 notices)
• WINZ payment recoveries
• Court orders

1. ACC Earner's levy
2. Student loan repayments (SL and SLCIR)
3. Kiwisaver employee contribution
4. Other voluntary deductions e.g.

• Voluntary student loan repayments (SLBOR)
• Insurance
• Union fees
• Additional superannuation
• Other deductions

Reducing balance:

This Yes/No field determines whether the deduction can be attached to an Employee Loans record so it can be used to gradually pay off the loan.

Maximum amount:

The amount in dollars that a deduction must not exceed for each pay period.

Minimum nett pay:

You can define the minimum percentage of the employee's nett pay that they must receive after this deduction is applied to their pay. Often used in child support deductions.

For example, an employee's nett pay is $100 and the deduction amount is $50. However, the deduction has Minimum nett pay = 75% so the employee's final pay is $75, not $50.

In this example, if the Deductions - Details (ii) tab also had Full amount only = "Yes", then nothing would be deducted from the employee's pay and a message would appear in the audit log. The employee's final pay would be $100 because processing cannot deduct the full amount without going below the minimum nett pay level.

The Minimum nett pay value overrides the Protected earnings value (see below).

Is a disbursement:

A deduction can sometimes be made as a disbursement to the employee. This field determines how the deduction is displayed on an employee's payslip.

• Yes

  Deduction is displayed in the Disbursements section of the payslip.

• No

  Deduction is displayed in the Deductions section of the payslip.

The Is a disbursement value affects Nett Pay values because Transaction View and payslips use the following calculation for Nett Pay:

Sum of all paying allowances - Sum of all "non-disbursement" deductions.

Protected earnings:

You can define the minimum nett amount that an employee must receive after this deduction is applied to their pay.

For example, an employee's nett pay is $300 and the deduction amount is $200. However, the deduction has Protected earnings = $150 so the employee's final pay is $150, not $100.

In this example, if the Deductions - Details (ii) tab also had Full amount only = "Yes", then nothing would be deducted from the employee's pay and a message would appear in the audit log. The employee's final pay would be $300 because processing cannot deduct the full amount without going below the protected earnings level.

You can also specify a protected earnings amount on the Employee Loans - Repayment Details tab. This value overrides the value defined in the Deductions record.

The Minimum nett pay value (see above) overrides the Protected earnings value.

Court orders usually set protected earnings as a weekly amount. It is more convenient to define the Protected earnings value in the Employee Loans record than the deduction. The employee is attached to a pay period, such as weekly or fortnightly, so you can scale the Protected earnings value accordingly. For example, if the court set protected earnings at $150 per week and the employee was paid fortnightly, their Employee Loans record would have Protected earnings = $300. If you set the protected earnings value in the deduction, you would have to set up a Deductions record for every variation in the protected earnings value.

See also

Deductions

Deduction Transaction Hierarchy