Defining Deductions

This chapter provides an overview of deductions for Australia and discusses how to:

• Calculate tax deductions.

• Schedule deductions using generation control.

• Check goal amounts.

• Manage garnishments.

Understanding Deductions

The PeopleSoft system provides a number of deductions to demonstrate the flexibility of Global Payroll rules and meet common processing requirements, such as the preservation of minimum net pay. The following sections discuss various ways to use deductions and supporting elements.

Delivered Deduction Elements

In the following table, the first column combines the deduction's name and description. The code (gc) indicates that the deduction has a generation control. The code (po) indicates a post-processing formula, and the code (pr) indicates a pre-processing formula. The other columns indicate the deduction's calculation rule of Unit × Rate, Unit × Rate × Percent, or Base × %. The formulas used for some of the deduction codes are discussed in further detail. The code (sy) stands for system element; it is not part of the element name.

There are also 22 deductions that relate to salary packaging; and they all start with the letters SP.

See Also

Setting Up Salary Packaging

Modelling Salary Packages

Managing Salary Packages

Calculating Tax Deductions

The tax deductions are in the section DED - TAX. All eight tax deductions have a calculation rule of Amount, and the amount is a formula specific to each deduction; for example, TAX FM MARGINAL or TAX FM LUMPA.

See Also

Setting Up for Tax Reporting

Managing Taxation Processing

Pre-Tax Deductions

There is only one deduction in the DED - PRE TAX section. It is EE SSSUPER (employee salary sacrifice super).

Post-Tax Deductions

These are in section DED - PST TAX and represent typical after-tax deductions such as parking fees, union dues, and social club membership fees. The section includes repayment deductions that are generated by the system when their associated earnings are paid.

Non-Tax Deductions

The non-tax deductions, which appear in section DED − NONTAX, are for superannuation. Three of the five deductions use a Base × Percent calculation rule. The other two deductions use amounts (one is a formula-driven amount and the other is a payee-level flat amount).

See Also

Monitoring Salary Packaging Expenditure

Scheduling Deductions Using Generation Control

The HEALTH FUND deduction element has a generation control, LVE GC BIGGER SEG, which uses formula LVE FM BIGGER SEG.

One leave-in-advance payment option enables you to advance only the leave pay within a pay period and pay the regular pay in its normal period. When this occurs, the system determines which is the longer period—leave or regular—and applies the deduction to the longer period. The formula returns True if the leave period is longer, and the generation control takes the deduction from the leave pay that is advanced.

The same formula ensures that the deduction is taken when there is period segmentation due to hire or termination.

When segmentation is due to something other than hire or termination, the deduction is taken in either:

• The longer of two segments.

• The segment in which the period midpoint occurs, when there are more than two segments.

The UNION, LOANDED, and TRANS REC deduction elements also have generation controls. Their formulas check that the deduction has not reached a period limit or goal amount. In the case of TRANS REC, the formula verifies that the payee is still active.

The LOAN REPAY deduction element's generation control formula also checks that the payee is still active. If the payee is not active, the deduction element applies and the Amount formula, TER FM LOAN REPAY, retrieves the loan balance. The TRANS ADV and LOAN REPAY deduction elements interact through their generation control formulas. If the payee is terminated, TRANS ADV isn't resolved but LOAN REPAY is.

The INSURANCE deduction element demonstrates the use of a generation control to ensure that the deduction is taken only in the first pay period, irrespective of the pay frequency. The deduction's calculation rule is Base × Percent, where:

Base = Accumulator AUS GROSS

Percent = 5.00

The AUS GC PERIOD1 generation control is one of seven generation controls that are discussed in the chapter on defining earnings.

See Also

Scheduling Earnings by Using Generation Control

Checking Goal Amounts

The calculation rule for the LOANDED deduction element is Base x Percent, where:

BASE AUS GROSS

Percentage = 10

This deduction has a goal limit that is the maximum amount that can ever be deducted. It is not a maximum per frequency.

The DED GC LOANDED generation control first checks if any part of the deduction can be taken. Its formula, LIM FM CHK LOANDED, checks that accumulator LOANDED AC LTDA (life-to-date LOANDED), is not greater than or equal to the variable LIM VR GOAL LIMIT, which set as the supporting element override when assigning the deduction to the payee. If it is, the formula returns false and the deduction is not processed.

However, even if the deduction is processed, the system must verify that this new instance of the deduction won't exceed the goal amount if it is taken in full.

The post-process formula LIM FM LOANDED verifies this. If there is a goal limit, the system proceeds with the formula, as follows:

LOANDED AC LTDA + LOANDED_ARR (any LOANDED arrears) + CURR AMT VALUE (system element, the value of LOANDED)

For example:

1150 + 0 + 90 = 1240 (GP TEMP001 NUM)

The formula then compares the new figure with the goal amount; for example, 1200.

If it finds that the new figure exceeds the goal amount, it subtracts the goal amount from the new figure to determine the excess amount; for example:

1240 − 1200 = 40 (LIM VR OVER LIMIT)

The formula then subtracts the excess amount from the current value of the deduction (for example, 90), and that becomes the value of the deduction for this pay period (which is the last time it's taken unless the goal amount is increased):

90 − 40 = 50

The UNION deduction element is managed in a similar way. Its generation control formula LIM FM CHK UNION checks whether Union's fiscal year-to-date accumulator is greater than or equal to LIM VR YTD LIMIT (goal amount for the year). If it is greater, the deduction is not processed.

If the deduction is processed, the post-process formula determines the effect that the new deduction would have on the year's goal amount if paid in full, and it reduces the deduction if necessary.

The LOANDED deduction element is assigned at payee level as an earning and deduction assignment. Set the goal amount as the numeric value of the element override, LIM VR GOAL LIMIT. Because goal amounts are typically different for each employee, the variable is not set as a system element override at the deduction level.

Managing Garnishments

Garnishments are deductions. You set up garnishment deductions just as you set up any other deduction. In addition to setting up the deduction, you can:

• Enter information-only details about the garnishment.

• Enter a protected minimum net pay for employees who pay garnishments.

Pages Used to Manage Garnishments

Calculating Garnishment Deductions

The PeopleSoft system provides three garnishment deduction elements: CHILDSUPPORT, WRIT, and COURT ORDER. Each is resolved differently.

Child Support

The CHILDSUPPORT deduction element has calculation rule Amount, and the amount is set at 50 AUD.

Writ

The WRIT deduction element has the calculation rule Base × Percent, where:

Base = Accumulator AUS AC DISP EARNS (disposable earnings)

Percent = 5.0

Accumulator AUS AC DISP EARNS members are:

• Accumulator AUS GROSS (+)

• Accumulator AUS TAX (−)

Court Order

The COURT ORDER deduction element has a generation control, GRN GC COURTORDER, which uses formula GRN FM PROC STATUS to verify that the processing status of the garnishment (set on the Garnishment Details page) is Approved.

The calculation rule for COURT ORDER is Amount, where the amount is formula GRN FM ALL BUT NET. The formula deducts all but the protected net pay amount from disposable earnings. Disposable earnings are stored in accumulator AUS AC DISP EARNS:

Segment accumulator AUS GROSS − Segment accumulator AUS TAX = AUS AC DISP EARNS (disposable warnings)

AUS AC DISP EARNS (disposable earnings) − DED VR PROTECT NET (protected net pay) = COURT ORDER deduction

The protected net pay variable is the amount that you enter in the single field on the Protected Net Pay page. The amount that you enter becomes the variable through the array AUS AR PROTECT NET in the INITIALISATION section in the AUS PAYROLL process list.

Entering Garnishment Details

Access the Assign Garnishments AUS page (Global Payroll & Absence Mgmt, Payee Data, Garnishments/Court Orders, Assign Garnishments AUS, Assign Garnishments AUS).

The garnishment deduction elements calculate the amount to deduct, but you may need to record other garnishment details. The Garnishments page is for recording information only. There is no system processing associated with the data, except that the generation control for COURT ORDER checks the status.