Defining Deductions

This chapter provides an overview of deductions for New Zealand and discusses how to calculate deductions for:

Note. The PeopleSoft system delivers a query that you can run to view the names of all delivered elements designed for New Zealand. Instructions for running the query are provided in the PeopleSoft Enterprise Global Payroll 8.9 PeopleBook.

See Also

Viewing the Delivered Elements

Click to jump to top of pageClick to jump to parent topicUnderstanding Deductions

We have created a number of deductions to demonstrate the flexibility of the Global Payroll rules to meet common processing requirements such as the preservation of minimum net pay.

Note. The User Key 2 on the Earnings Accumulators page and Deduction Accumulators page for all earnings and deductions is CMN VR BALGRP ID (Balance Group ID). Use balance group numbers (IDs) to maintain separate employee balances. You set an employee’s balance group number on the Job Data, Payroll page— JOB_DATA2. The balance group number will need to be manually incremented if you are required to record separate balances within a financial year.

Click to jump to top of pageClick to jump to parent topicDelivered Deduction Elements

In the following table, the first column combines the deduction name and description. A (gc) in the row indicates that the deduction has a generation control. A (po) indicates a post processing formula, (pr) indicates a pre processing formula. The other four columns indicate the deduction calculation rule of Unit × Rate, Unit × Rate × Percent, Amount . In the table sy = system element.

Note. The tax deductions are included in the table but discussed in greater detail in the taxation chapter.

Name and Description

Unit (or Base)

Rate

%

Amount

PAYE TAX

PAYE Tax (gc)

     

TAX FM PAYE TAX

EXTRA EMLMNT

Extra Emolument Tax (gc)

     

TAX FM XE TAX

WITHHOLDING

Withholding Tax (gc)

     

TAX FM WITHOLD TAX

CHILD SUPPRT

Child Support (po)

     

Payee Level

STUDENT LOAN

Student Loan Repayments (gc)

     

TAX FM SL TAX

SSCWT

Spec Super Contr Withhold Tax

     

TAX VR SSCWT AMNT

SOCIAL CLUB

Social Club (gc)

     

8.00

MEMBSHP FEES

Membership Fees (gc)

     

DED FM MEMBERSHIP

UNION

Union Fees (gc)

     

DED FM UNION

WRIT

Writ

Base (Accum - DISPOSABLE EARNING)

 

Payee Level

 

COURT ORDER

Court Order (gc)

Base (Accum - DISPOSABLE EARNING)

 

Payee Level

 

TRANS REC

Transport Loan Recovery (gc) (po)

Base (Accum — TRANS ADV AMT)

 

Variable Numeric

LN VR REC AMT

 

LOAN REPAY

Loan Repayment (gc)

     

Accum - LOAN BALANCE

SUP GOV EE

Super Government Fund – EmpEE

Base (Accum - NZL GROSS)

 

Payee Level

 

SUP GOV ER

Super Government Fund – EmpER (po)

Base (Accum - NZL GROSS)

 

DED FM SUP GOV ER

 

SUP NPF EE

National Provident Fund – EmpEE

Base (Accum - SUPERABLE SALARY)

 

6

 

SUP NPF ER

National Provident Fund – EmpER (gc)(po)

Base (Accum - SUPERABLE SALARY)

 

6

 

SUP GRSUP ER

Super Gross Up Fund – EmpER (po)

     

Payee Level

XE GRS UP

Extra Emolument for Gross Up

     

TAX FM XE TAX

Click to jump to top of pageClick to jump to parent topicMaking Social Club Deductions

The social club deduction reduces the employee's after-tax income by a nominated amount. The amount is paid monthly. The system annualises and deannualises the amount to resolve it correctly for the various pay calendars.

A generation control, DED GC SOCIAL CLUB, has formula DED FM SOC BIGGER that ensures that the system applies the deduction only in the larger of the segments within the period. A second GC formula checks that the payee is active.

Click to jump to top of pageClick to jump to parent topicDeducting Membership Fees

The earning in a fortnightly period determine the amount of the membership fee deduction which may be percentage or a flat amount. The calculation rule amount is formula DED FM MEMBERSHIP that determines if the accumulator that houses the earning that fees are based upon, MEMB EARNINGS, is less than the value of the deduction's system element override DED VR MEM MAX AMT for a fortnight. If the amount is below the DED VR MEM MAX AM, the system multiplies the accumulator value by 1%. If not less than DED VR MEM MAX AMT, the amount is the value of the DED VR MEM MAX AMT. The formula also converts frequencies other than fortnightly to a fortnightly amount

Click to jump to top of pageClick to jump to parent topicDeducting Union Fees

The calculation rule amount for the Union deduction is formula DED FM UNION. The formula passes the value of the accumulator UNION EARNINGS to the variable DED VR UN ERN FN and bracket DED BR UNION RATES determines the amount of the deduction based on the variable value. Frequencies other than fortnightly are converted to a fortnightly amount

Generation control DED GC UNION LAST uses DED FM UNION LAST to ensure that the deduction is taken only in the last segment of the period.

Click to jump to top of pageClick to jump to parent topicCalculating the Writ and the Court Order Deductions

The calculation rule for both these deductions is base x percent where the base in the DISPOSABLE EARNINGS accumulator (NZL GROSS – NZL TAX) and the percentage is set at payee level.

The court order deduction has generation control DED GC COURT ORDER . It uses DED FM PROC STATUS to check the value of DED FM VR PROC STATUS to ensure that the system only takes the deduction if the status of the court order is Approved. You enter the status on the Payee Garnishment (GPNZ_GARN_DTLS) and array GPNZ_PROC_STATUS passes the status value to the variable.

Click to jump to top of pageClick to jump to parent topicPages Used to Administer Garnishments

Page Name

Object Name

Navigation

Usage

Payee Garnishments

GPNZ_GARN_DTLS

Global Payroll & Absence Mgmt, Payee Data, Garnishments/Court Orders, Assign Garnishments NZL

Assign garnishments to an employee.

Protected Net Pay

GPNZ_PROTECT_NET

Global Payroll & Absence Mgmt, Payee Data, Garnishments/Court Order, Protected Net Pay NZL

Specify amount of employee's net pay to protect from garnishment.

Click to jump to top of pageClick to jump to parent topicCreating Earnings Advance and Recovery

Some earnings are loans or advances; therefore, when they are paid, the system must automatically create a deduction that is processed over subsequent pay runs, recovering the loan or advance.

The PeopleSoft system provides the following elements, accumulators, formula, and generation control to demonstrate this:

Name

Type

Usage

TRANS ADV

Earnings element.

Adds advance amount to paycheck when advance occurs.

TRANS ADV AMT

Accumulator.

Stores amount of advance.

TRANS BAL AMT

Accumulator.

Stores reducing balance.

TRANS REC

Deduction element.

Deducts portion of advance from paycheck in subsequent pay runs.

ADV FM GC CHECK

Advance recovery check formula.

Adjusts the deduction if taking it all would cause the goal amount to be exceeded.

ADV GC REC IND

Advance recovery generation control.

Controls execution of advance recovery check formula.

Click to jump to top of pageClick to jump to parent topicDeducting the Loan Repayment

The LOAN REPAY deduction deducts any outstanding loan amounts on termination of the payee. It is an amount calculation. The amount is the value of the LOAN BALANCE accumulator. Any balance becomes the amount of the deduction.

The deduction's generation control, CMN GC TERM STAT, has formula CMN FM TERM STAT, that determines whether to resolve the payment of various earnings and deductions.

The formula checks for either a termination date in the pay period or a termination action date in the period. It checks for both to accommodate the situation where you may have not entered the termination until the pay period after the period in which the termination occurred. If the check was only on the termination date, the deduction would not be processed because that date would be outside the current pay period begin and end dates.

The following diagram shows this.

Checking for a termination date or termination action date.

Click to jump to top of pageClick to jump to parent topicDeducting Government Superannuation Contributions

There are two superannuation deductions, one for the payee's contribution, the other for the employer's contribution. The payee's contribution deduction, SUP GOV EE, has a calculation rule of base x percent where the base is the payee's NZL GROSS accumulator amount and the percent is set at payee level.

The employer's contribution deduction, SUP GOV ER, has a calculation rule of base x percent. The base is the payee's NZL GROSS accumulator value and the percent is formula DED FM SUP GOV ER. The formula checks the payee's contribution percent and matches that contribution up to a maximum set on the deduction's system element override DED VR SUPGOV MAX.

A flat amount post-process formula, TAX FM SS FLAT RATE, on the employer's deduction calculates the Specified Superannuation Contribution Withholding Tax (SSCWT).

Click to jump to top of pageClick to jump to parent topicDeducting National Provident Fund Contributions

There are two NPF deductions and the payee's and employer's deductions are calculated exactly the same way. The calculation rule is base x percent where the base is the SUPERABLE SALARY accumulator, and the percentage is the legislated value.

A flat amount post-process formula, TAX FM SS FLAT RATE, on the employer's deduction calculates the Specified Superannuation Contribution Withholding Tax (SSCWT).

Click to jump to top of pageClick to jump to parent topicUsing the SSCWT Gross Up Tax Calculation

We have provided the SUP GRSUP ER deduction to demonstrate the correct use of the SSCWT gross up tax calculation. The calculation rule is an amount where the amount, set at payee level, is initially entered as a grossed up amount. The deduction's post-process formula, TAX FM SS GRS UP, calculates the SSCWT. It also adjusts the grossed up amount to the value that's correct for the net amount.

Note. The system uses the other gross up deduction, XE GRS UP, in the Net-to-Gross functionality. The deduction's calculation rule is formula TAX FM XE TAX, which calculates the employee's extra emolument tax amount.

See Also

Calculating Net-to-Gross Payments