Understanding Delivered Deduction Elements

You use these delivered deduction elements as delivered, modify them, or create new elements.

In the following table, the first column combines the deduction name and description. The letters GC in a row indicate that the deduction has generation control. The other five columns indicate the deduction's calculation rule: Unit × Rate, Unit × Rate × Percent, or Base × Percent. The formulas used for some of the deduction codes are discussed in further detail. The letter N in a row indicates numeric.

The CASHADVR and COMCHST deductions are members of the DED SE COMMON process section.

The ERMPFMN1, ERMPFMN2, ERMPFVOL1, ERMPFVOL2, EEMPFMN1, EEMPFMN2, EEMPFVOL1, and EEMPFVOL2 deductions are members of the MPF SE DEDUCTION process section.

The DED SE COMMON and MPF SE DEDUCTION sections are included in the CM PR PAYROLL process list.

PeopleSoft delivers a query that you can run to view the names of all delivered elements designed for Hong Kong. Instructions for running the query are provided in PeopleSoft HCM: Global Payroll.

Employees can be paid 50 percent of their basic salary cash advances (CASHADV), which they must pay back using CASHADVR in installments over five months. Use the cash advance recovery deduction exclusively to offset the cash advance. For cash advance payments, employees do not pay interest.

As the total cash advance recovery amount is deducted from the annual taxable income, the cash advance recovery is a taxable deduction.

The generation control CM GC RSLV CSHADVR determines when the deduction starts and stops, if period segmentation occurs.

The formula DED FM RSLV CSHADR is attached to the generation control and determines if the cash advance accumulator is greater than zero. If so, the deduction is resolved. The accumulator is timed after calculation because the deduction is resolved after the CASHADV earning is paid (the accumulator is updated after the deduction—not when the earning is resolved). The first time that the earning is paid, the deduction is not resolved because the accumulator is updated at the end of the pay run.

In the next period, the deduction is resolved because the accumulator would have been updated with the earning amount. The generation control determines if the goal amount balance has been reached.

The community chest deduction enables employees to donate to charity from their salaries. The donated amount is a taxable deduction and is paid at the earning assignment level. Proration is not applicable to the donation.

The generation control CM GC RSLV ONCE prevents deducting the allowance more than once if period segmentation occurs.

All members of the workforce, between age 18 and 65, except those who are exempt, are required to make regular contributions to registered Mandatory Provident Fund (MPF) schemes. Contributions are calculated at 10 percent of the employee's income, with the employee and employer each paying 5 percent. Both the employee and employer can elect to make additional voluntary contributions.

The employer and employees' contributions are deducted and paid to the selected MPF scheme each pay period. After the MPF scheme receives the deductions, they are immediately deposited into the employees' retirement savings plans.

Eight MPF deductions are provided:

• Employer MPF Regular Mandatory 1 - ERMPFMN1.

  The ERMPFMN1 deduction is used for employer regular MPF mandatory contributions.

• Employer MPF Permitted Period Mandatory 2 - ERMPFMN2.

  The ERMPFMN2 deduction is used for employer MPF mandatory contributions during the 60-day permitted period.

• Employer MPF Regular Voluntary 1- ERMPFVOL1.

  The ERMPFVOL1 deduction is an additional 5 percent of relevant earnings and should be given to all employees. The rest of the rules are the same as for the MPF Employer Voluntary deduction. The deduction is used for employer MPF voluntary contributions.

• Employer MPF Permitted Period Voluntary 2 - ERMPFVOL2.

  The ERMPFVOL2 deduction is used for employer MPF voluntary contributions during the 60-day permitted period.

• Employee MPF Regular Mandatory 1 - EEMPFMN1.

  The EEMPFMN1 deduction is used for employee MPF mandatory contributions.

• Employee MPF Permitted Period Mandatory 2 - EEMPFMN2.

  The EEMPFMN2 deduction is used for employee MPF mandatory contributions during the 60-day permitted period.

• Employee MPF Regular Voluntary 1 - EEMPFVOL1.

  The EEMPFVOL1 deduction is used for employer MPF voluntary contributions.

• Employee MPF Permitted Period Voluntary 2 - EEMPFVOL2.

  The EEMPFVOL2 deduction is used for employee MPF voluntary contributions during the 60-day permitted period.