Deduction Types

Deductions are amounts that are withheld from an employee's Gross Pay or Net Pay. Examples are Employee's Superannuation Contributions, Child Support, Extra Tax, Employee Loan Repayments.

To view, add or customise Deductions types, select System > Deductions from the Marlin HR menu.

Shown below is a list of typical Deductions types, each with typically selected settings.

:::(Info (Note)
The settings shown on the Deductions above are examples only. We strongly recommend that you check with the ATO, your employer organisation or your tax accountant for the correct settings for your workplace.
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Setting up a deduction for an employee involves two steps:

• Creating the Deduction type (if not already in the system); and
• Adding the Deduction type to the employee in Employee Maintenance.

Adding Deductions

From the Marlin HR menu, select System > Deductions.

If the deduction type you need doesn't already exist, click on the Add icon.

Type in a meaningful Name for the deduction (remember that it will appear on Pay Advices).

Optionally. enter a Pay Advice Comment (this will be printed directly below the Deduction Name on the Pay Advice whenever this deduction is applied to an employee).

Tick the Active checkbox so that the new Deduction is available for use on a payrun and can be applied to an employee as a recurring deduction in Employee Maintenance.

Select whether the deduction is to be applied Before Tax, After Tax, or is Tax Itself (you would only select 'Tax Itself' on a deduction for Extra Tax).

Select the appropriate ATO Deduction Type from the list (or None if the deduction is not reportable to the ATO).

Click on the Save icon to save your new deduction.

Recurring Deductions

Select Employee Maintenance and open the relevant employee,

Select the Pay Details tab.

In the Recurring Deductions section (bottom right) click on the Add icon.

Select the appropriate Deduction from the drop down list.

Select the appropriate Liability Account from the drop down list.

If the deduction is for Superannuation, after selecting the Liability Account you will be prompted to select the Superannuation Fund & Member Number.

Select the General Ledger expense account (normally Salaries & Wages) if the Deduction is applied BEFORE Tax.

Enter the $ amount to be deducted each pay. If the amount changes or is not to be applied on every pay, enter $0 and you can manually enter the amount during the payrun.

Click on the OK button to save the Deduction for this employee.

:::(Info (Note)
Earnings types, Allowances and Deductions (and their values) that you apply to an employee in Employee Maintenance will automatically appear on the Normal Pay Run for each pay period (you can remove them or change the values on the pay run before finalising it if they are different for that pay period). However, to avoid duplication, they will not appear on Adjustment Pay Runs.
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Applying Deductions

This table shows how to setup common deductions for an employee in Employee Maintenance:

• Child Support - where you are asked to garnish an employee's pay for Child Support payments.
• Extra Tax - where an employee asks you to withhold extra tax each pay in order to reduce their tax return bill (or increase their refund) at the end of financial year.
• Superannuation Contribution - where an employee asks you to divert some of their Before Tax pay into their Super fund (this reduces their Gross Earnings and can reduce their Tax).
• Superannuation Contribution - where an employee asks you to divert some of their After Tax pay into their Super fund.

Depending upon whether you have linked all super funds to one Liability Account (e.g. Super To Pay) or each super fund has it's own Payroll Liability Account (e.g. MTAA Super), the Super Contribution (Before Tax) example above would look like one of these as you apply it to the employee.