11 Understanding Payroll Processing for Australia and New Zealand

This chapter contains the following topics:

11.1 Australia/New Zealand Payroll

The payroll process is the same for all supported countries, and includes:

  1. Processing pre-payroll.

  2. Printing payments.

  3. Adding journal entries.

  4. Running payroll reports.

  5. Running the final update.

To process employees in Australia and New Zealand through a payroll cycle, you must complete all of these steps. You should have a thorough understanding of the basic JD Edwards EnterpriseOne Payroll system before you set up or process payroll information for employees in Australia and New Zealand. This documentation discusses only the steps, features, and processes that are specific to processing payroll for employees in Australia and New Zealand, and is intended to be used in conjunction with the JD Edwards EnterpriseOne 9.0 Payroll Implementation Guide.

11.2 Features of Australia and New Zealand Payroll Processing

To correctly update payroll records for employees in Australia and New Zealand, you must process those employees through a complete payroll cycle. Though the steps of the payroll cycle are the same for all supported countries, you can use additional steps, features, and procedures to process country-specific information for employees in Australia and New Zealand. This table describes these processes:

Country-Specific Process Description
Processing Payments The system supplies country-specific payment programs, which create payment information that meets the requirements of organizations in Australia and New Zealand.

The system also provides programs that enable you to record reference data and trading bank information, which is used specifically in New Zealand payment processing.

Additionally, if the organization pays employees in cash, you can set up coinage analysis information.

Tax Information The system provides several programs for you to set up tax information so that all earnings are calculated according to the rules of the government taxing authorities under which the employees work.

The system also provides reports to review tax setup.

Employee Leave The system provides programs and reports that enable you to meet the leave requirements of the organization. You can:
  • Meet the requirements of the New Zealand Holiday Act.

  • Process Time Off In Lieu (TOIL).

  • Process Rostered Days Off (RDO) Leave.

  • Process Long Service Leave (LSL) Rollovers.

  • Use Leave Loading.

Superannuation Contributions The system provides two methods for managing superannuation contributions. You can enter superannuation funds into the system, assign allocation percentages to each fund for each eligible employee, and automatically create superannuation payments during payroll processing.

Alternatively, you can calculate superannuation contribution amounts during the payroll cycle and enter payments manually at the time the organization makes payment to the fund administrator.

Whichever method you select, the system enables you to track and report superannuation data to comply with superannuation legislation, which is regulated by the Australian Tax Office (ATO).

Termination The system provides programs that facilitate the complex tax calculations that are involved with employee terminations in Australia.
Governmental Tax Reporting The system enables you to generate reports and files that are necessary to report year-end tax information to the Australian and New Zealand governments.

11.3 UDCs for Australia and New Zealand

To process payroll in Australia or New Zealand, you must set up the country-specific UDCs in addition to the UDCs for JD Edwards EnterpriseOne Payroll and for JD Edwards EnterpriseOne Human Capital Management Foundation.

11.3.1 Fund Allocation DBAs (07/FD)

To automatically create superannuation payments during the payroll process, you must define the deductions, benefits, and accruals (DBAs) that calculate superannuation benefits and deductions in this UDC table. You first set up the DBAs, then assign the DBAs to employees using benefits enrollment or manual entry. You then set up employee fund allocation information. The system calculates the DBAs during payroll processing. If any of the DBAs that calculate for an employee are located in this UDC table, the system searches for fund allocation information for the employee, and prorates the amount that is calculated for the DBA across all of the funds in which the employee is currently enrolled.

11.3.2 Fund Type (07/FA)

Use fund type codes to specify whether a superannuation fund is an employee deduction or an employer benefit. The system uses this code to ensure that employees are enrolled in only one superannuation benefit fund at a time.

11.3.3 Australia Payee AU Business Number (75A/PA)

Use payee Australia Business Number (ABN) codes to specify the value to be populated on the payee record when you run the Superannuation XML Extract report (R75A0350). The UDC table links the address book number of the fund to the ABN of the payee. You need to enter the address book number of the provider or trustee in the Codes field and the ABN in the Description 01 field of the UDC table.

Note:

The address book numbers vary by customer and therefore the JD Edwards EnterpriseOne system does not provide any codes in the UDC table.

11.3.4 Australia Payment Method Code (75A/PM)

Use payment method codes to specify the method for payment as defined by the Australia Tax Office (ATO) SuperStream contribution taxonomy.

11.3.5 KiwiSaver DBA Codes (75/KS)

You use this table to identify which DBA codes your organization uses to calculate the employee and employer contributions to the KiwiSaver retirement plan.

11.3.6 Level of Calculation (75/LC)

You use level of calculation codes to define how you want the system to calculate tax amounts. The level of calculation determines whether you want level breaks (which determine the tax rates for specified income levels), limits, and adjustment amounts to apply to weekly, monthly, or annual earnings.

The Description 2 field is used as a divisor to determine the number of periods in a year. The number in the Special Handling field is used to convert annual salary to the pay-period salary.

11.3.7 Leave Type (75/LT)

You use leave type codes to identify pay codes that are considered leave pay types for the calculation of average gross earnings. If you enter a timecard using a pay type that is stored in UDC 75/LT, the system automatically updates the information on the Average Gross Earnings Revisions form.

11.3.8 Payee Type (75/PT)

You use payee type codes to specify the type of person or entity that is receiving an eligible termination payment (ETP) when an employee in an Australian organization is terminated due to death. The system uses these codes to determine the tax rate that is applied to the ETP. The tax rate partially depends upon the entity that is receiving the payment. For example, the ETP is taxed at one rate if payment is made to a dependent and at another rate if a payment is made to non-dependent.

11.3.9 Rate Code (75/RC)

You use rate codes to identify earnings in different tax categories. Examples of rate codes include M for earnings that are received in a main job and S for earnings that are received in a secondary job.

The Description 2 field contains the name of a data item. The Special Handling field contains a value that might be entered in the data item that is entered in the Description 02 field. When the system calculates tax information for an employee, if this data item contains the value that is stored in the Special Handling field, the tax is to be calculated for the employee.

For example, you might want to set up a rate code that the system calculates only for employees whose work state is New South Wales. You might enter a rate code of 82 (for New South Wales) in UDC 75/RC. In the Description 02 field, you would enter WSKE (the data item for work state), and in the Special Handling field, you would enter NSW. In this example, the system would calculate the taxes that are associated with this rate code only for employees who have NSW in the Enter the State You Work In field on the Australian Tax Overrides form.

11.3.10 Rule Type (75/RT)

You use rule type codes to determine how to calculate payroll taxes for specified earnings. The way that the system calculates taxes for a particular payment, deduction, benefit, or accrual (PDBA) depends on the rule type code that is associated with that PDBA code. Examples of rule type codes include LL for leave loading and LSL for long service leave payments.

11.3.11 Tax Scales (75/SC)

You use tax scale codes to identify the tax category in which an employee belongs. The appropriate tax scale is automatically derived if accurate tax information is entered into the JD Edwards EnterpriseOne Payroll system, or you can override the derived tax scale.

11.3.12 Type of Leave (75/TL)

You use type of leave codes to identify the leave category in which a PDBA belongs. Examples of type of leave codes are ANN for annual leave, and LSL for long service leave. This UDC table is reserved for future use.

11.3.13 Tax Factor (75/TO)

You use tax factor codes when you want to pay an employee for more or less than a full pay period by using an interim payment. For example, if an employee begins working midway through a monthly pay period, you can set up a tax factor that is equal to .50. When you enter this tax factor on the interim payment that you create to pay the employee for the portion of the pay period in which that employee worked, the system automatically calculates the employee's taxes using the tax factor. This enables the system to annualize the employee's salary and tax the amount of the payment accordingly.

You can also set up tax factors to use when calculating interim payments that cover more than one pay period. For example, if you want to pay an employee for one and one-half pay periods, you could set up a tax factor that is equal to 1.5. When you enter this tax factor on an interim payment, the system annualizes the employee's salary and taxes the earnings accordingly.

You can use codes A through Z to define tax factor codes. The number that you enter in the Special Handling field is the numeric value that represents the portion of the pay period that the employee works. For example, if you want to create a tax factor to represent half of a pay period, you enter .5 in the Special Handling field for the specified code. This table illustrates how you might set up the .50 and 1.5 tax factor codes in UDC 75/TO:

Code Description 01 Special Handling Hard-Coded
A Tax Factor .50 .5 N
B Tax Factor 1.5 1.5 N

11.3.14 Termination Type (75/T1)

You use termination type codes to identify the reason for an employee termination. These codes are used to calculate eligible termination pay (ETP) for employee terminations in Australia. Because the Australian Tax Office has different tax regulations for each type of termination, the ETP calculations differ for each termination type. The system uses the value in the Special Handling column of the UDC to determine the tax calculation method that should be used. This table illustrates the special handling code that should be used for each type of termination:

Termination Type Special Handling Code
Normal Resignation or Retirement 1
Redundancy 2
Post 94 Disability 3
Death 4

11.3.15 Preservation Age (75/PA)

You use preservation age code to identify an age of the employee based upon the Preservation Age table provided by the ATO. Preservation age is compared to the actual employee age. If the employee age is under the preservation age, you use a higher tax rate to calculate the Employee Termination Payment (ETP). If the employee age is over preservation age, you use a lower tax rate to calculate the ETP.

11.3.16 ETP Print Code (75/PC)

This code is printed on the ETP Payment Summary report. You use this code to indicate how the Taxable component, Tax Free component and Total Tax Withheld component relate to the type of employee payment being paid. ETP code R is related to early retirement scheme, genuine redundancy, invalidity, and so on. ETP code O is related to golden handshake, gratuity, payment in lieu of notice, and so on. You can also use ETP codes related to death (D, N and T).

11.3.17 ETP High Tax Rate (75/ET)

You use this code to store the high tax rate that is used to calculate the tax above the applicable cap. The ATO taxes amounts above the applicable cap (either ETP Cap or Whole of Income Cap) at a high tax rate (currently 46.5%).