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  3. Allowances, Deductions & Reimbursements

Deductions

Set up and manage deductions

Take control of your deductions, by applying deductions in bulk all from the one page!

In your platform, you have the ability to create new deduction types and non-superannuation salary sacrifice options, which can then be easily applied to your employees, either individually or in bulk.

Some examples of deductions include:

  • Processing overpayments
  • Uniforms
  • Union fees
  • Child support payments

Some examples of non-superannuation salary sacrificing include:

  • Salary packaging
  • Novated leases

  Please note: When applying salary sacrifice to your employees' superannuation, a separate process is used. For more information, please refer to our article on Applying Salary Sacrifice to an Employee.

In this article, we will cover: 

  • Creating and editing new deduction types
  • How to edit a deduction including changing the STP category of a deduction for a financial year
  • Applying deductions in bulk from the Deductions menu
  • Applying a deduction to an employee profile
  • Applying a deduction to a payslip
  • Ending deductions
  • Reporting on processed and unprocessed deductions

  For further reading and to learn how to apply Protected Earning Deductions to an Employee's profile, you can find that here!

Create Deductions

Create a new deduction type

When managing deductions, the first step is to create the deduction type. Setting up a deduction type involves establishing the rules for how the deduction will be applied to a payslip and reported via STP.

You need to determine if the deduction applies to the gross or net pay, and whether it is reportable. If it is reportable, you also need to specify how it should be reported.

When setting up a deduction, please consider that the fields, method and deduction type as they are unable to be updated or edited later. If these fields require a change, a new deduction will need to be set up. 

Once a deduction type is set up, it can be applied in bulk to your employees or added to their payslips through an edit.
 

To add a new deduction type:

  1. From the main menu, navigate to Payroll Settings > Deductions. 
  2. Select + Create new.
  3. Select Deduction from the drop-down and enter the following details:
    • Name - Name of the deduction. This will be visible to the employee on their payslip.
    • Method - Fixed amount ($) or percentage (%).
    • Deduction Type - Pre-tax (gross) or Post-tax (net).
    • STP Deduction Type - You have the option to choose from:
      • Not reportable
      • Fees
      • Workplace Giving
      • Child Support Deductions
      • Child Support Garnishees 
    • Pay to Another Account - Pay the deduction directly into another account when processing your ABA. You have the option to choose from:
      • Yes - This will allow you to specify another bank account into which to pay the deduction. 
      • No - The value will be withheld from the employee's pay but will not go anywhere. 
        Please note: A deduction that is specified to pay into another bank account cannot be added to the timesheet/payslip manually. If the timesheet/payslip has already been generated for the employee, the deduction will need to be applied to the Employee Profile or via the Deductions page.
  4.   Select Save.

Create a new salary sacrifice type

Before a salary sacrifice (non-superannuation) can be added to an Employee Profile or edited on a payslip, you'll first need to set it up as a deduction type.

  Please note: The following information relates to non-superannuation salary sacrifices (e.g. novated leases). If you are looking for information regarding salary sacrificing for superannuation, you can find that here. 

To add a new salary sacrifice:

  1. From the main menu, navigate to Payroll Settings > Deductions. 
  2. Select + Create new.



  3. Select Salary Sacrifice from the drop-down and enter the following details:
    • Name - Name of the salary sacrifice. This will be visible to the employee on their payslip.
    • Method - Fixed amount ($) or percentage (%).
    • Pay to Another Account - Pay the deduction directly into another account when processing your ABA. You have the option to choose from:
      • Yes - This will allow you to specify another bank account to pay the salary sacrifice into. 
      • No - The value will be withheld from the employee's pay but will not go anywhere. 
        Please note: A salary sacrifice that is specified to pay into another bank account cannot be added to the timesheet/payslip manually. If the timesheet/payslip has already been generated for the employee, the salary sacrifice will need to be applied to the Employee Profile or the Deductions page.
  4.   Select Save.

Edit an existing deduction

Your existing deductions can be edited at any time. However, please keep in mind that changes made will only affect future use of the deduction. 

Before making any changes to your deductions, the following fields cannot be updated, if you have made the wrong selection, you will need to create a brand new deduction:

    • Method - Fixed Amount $ or Percentage %.
    • Deduction Type - Pre-tax or Post-tax.

When editing your deductions, please be aware that this will not be reflected in historical data. If changes made, need to be updated for processed payslips, please reach out to support for assistance.   

To edit a deduction:

  1. From the main menu, navigate to Payroll Settings > Deductions. 
  2. Locate the deduction you'd like to edit, using the search box if required. 
  3. Select the edit icon to the right of the deduction and select edit deduction. 
  4. Change any of the following items as you require, then save. 
    • Type - Deduction or salary sacrifice. 
    • Name - Name of the deduction. This will be visible to the employee on their payslip.
    • Pay to Another Account - Pay the deduction directly into another account when processing your ABA. You have the option to choose from:
      • Yes - This will allow you to specify another bank account to pay the deduction into. 
      • No - The value will be withheld from the employee's pay but will not go anywhere. 
  Please note: A deduction that is specified to pay into another bank account cannot be added to the timesheet/payslip manually. If the timesheet/payslip has already been generated for the employee. In that case, the deduction will need to be applied to the Employee Profile or the Deductions page. 
Change the STP category of a deduction

You may find that your deduction has been attributed to the wrong STP category and you'd like to correct this. If this is the case, users with the relevant permission will have access to change the STP category assigned to deductions, pay items, allowances and leave items.

Before you start, please note that STP category changes once made will affect the following:

    • The full financial year that is selected 
    • All payslips on all employees

  Please note: Only users with the permission 'Manage STP Categories' can make changes to STP categories as this will move all of your reportable data to a new STP reporting category.

To change the deduction STP category:

  1. From the main menu, navigate to Payroll Settings > Deductions. 
  2. Locate the deduction you'd like to edit, select the edit icon to the right, and choose the Change STP category selection.

  3. The current STP category will show in the drawer. To make a change, adjust the following selections:
    • New STP category - All relevant choices will show the drop-down box. You have the option to choose from:
      • Not reportable - This will be unavailable to select for net deductions.
      • Fees
      • Workplace Giving
      • Child Support Deductions - This will be unavailable to select for post-tax deductions based on pre-tax earnings.
      • Child Support Garnishees - This will be unavailable to select for percentage-based deductions.
    • Apply change beginning from - This change will apply to the entire selected financial year.
    • Preview related payslips - Engage the toggle to view all related payslips where this STP category change will be reflected.

        Hot tip: Updating the STP category will affect employee's ATO data. Please ensure you are aware of the implications when performing this action. The blue ATO badge will link you directly to ATO guidance on STP reporting.
  4. Once your selections are finalised, select the Apply Change button.

You'll now see your changes registered under the STP category column (refresh your browser to view the changes).

  In the below example, we're going to update the STP reporting category for Social club fees for this financial year. Watch along as we make this change, view any associated payslips and refresh our screen once complete to see the change take effect.

Archive a deduction

When a deduction is no longer required it can be archived. An archived deduction will:

    • Be unable to be configured as a new deduction on employee profiles.
    • Have its historical data maintained and reportable. 
    • Remain on employee profiles that it is configured on. 
    • Continue to deduct wages for employees that have it configured. 

Archive a deduction

To archive a deduction:

  1. From the main menu, navigate to Payroll Settings > Deductions. 
  2. Locate the deduction you'd like to edit, using the search box if required. 
  3. Select the edit icon to the right of the deduction and select Archive.

 

Restore a deduction

An archived deduction can also be restored if you would like to be able to use it again. 

To restore an archived deduction:

  1. From the main menu, navigate to Payroll Settings > Deductions. 
  2. Select the Archived filter in the top-right to display your archived deductions. 
  3. Locate the deduction you'd like to restore, using the search box if required. 
  4. Select the restore icon to the right of the deduction.  

Apply Deductions

Managing deductions in bulk *NEW

Are you looking for an easy way to view and manage employee deductions from one place?

The Deductions page allows you to do just that; from this page, you will be able to:

    • Apply a deduction either individually or to multiple employees all at once
    • View all employee deductions
    • Filter and search for specific employees and deductions
    • View deduction history
    • Edit/ end employee deductions

  Please note: Protected Earnings Deductions can be viewed from the Deductions page. However, they are applied and managed from an Employee's Profile. You can learn more here about Employee Protected earnings deductions.

To experience a virtual walk-through of the main Deductions menu, check it out below. Press the Expand option on the top right to view in full screen!


Navigating the Deductions page

The quickest way to add and manage your deductions is from the Deductions page. You can locate this page from your quick menu > Payroll > Deductions. 

On the Deductions page, you will see a complete list of all employees and each deduction applied. This list will include a breakdown of key information about each deduction; this consists of the following fields:

    • Name - Employee's name and links to the Employee's profile. 
    • Deduction - This is the deduction type/ name of the deduction.
    • Reference - Internal reference for the deduction. 
    • Method - How is the deduction being applied, this includes:
      • One-off - Total amount paid from a singular payslip.
      • Instalments - A total amount paid over multiple payslips.
      • Recurring - No total amount repeats over a timeframe.
    • Start - Period start date for the deduction.
    • End - Informs how many payslips are needed until the deduction has been completed. 
    • Per pay - Amount deducted per payslip. 
    • Total - Total amount to be deducted overall.
    • Icons - These will highlight if the deduction has any of the following:
      • Threshold - A threshold amount has been applied to the deduction.
      • Comments - Comments have been included. 
      • Protected Earnings Deduction - Informs that the deduction type is Protected Earnings Deduction. 

To better navigate the Deductions page, you can use filters to narrow down your search results. These filters include Office Code, Employee, and Deduction type.

Additionally, you can also filter between Active (current/ upcoming) deductions and Ended (completed/ cancelled) deductions by selecting the corresponding badge at the top right corner of the screen. 


  Hot tip: You cannot apply a deduction to an employee until it has been configured in Payroll settings > Deductions first. If you need to set up a new Deduction type quickly, you can access the page by selecting the cog icon next to the Deductions title.

 

Apply a deduction to employees in bulk

How to apply a deduction for multiple employees:

  1. Navigate to the Deductions page, by navigating to the quick menu > Payroll > Deductions. 
  2. Select + New Deduction. 
  3. In the Employee field, select the employees that require the deduction. 
  4. Select your deduction method and make your selection from the following:
    • One-off - Total amount paid from a singular payslip.
    • Instalments - A total amount paid over multiple payslips.
    • Recurring - No total amount repeats over a timeframe.
  5. Complete the deduction details:

      Please note    : Depending on the deduction type you choose, some of the below fields may not appear. 

    • Deduction type - Select from your configured deductions and salary sacrifices. 

    • Account name - Name of the account the account the deduction is to be sent.
    • BSB - Account BSB for the deduction recipient. 
    • Account Number - The number of the external account to which the deduction will be sent.
    • Pay period/ Starting from - Specify the payslip or period the deduction commences. 
    • Recur until - The period ending the deduction will end on.
      • If no date is specified the deduction will recur indefinitely. 

    • Total Amount - The total amount to be deducted.

    • Instalments - The instalment amount is to be deducted per payslip.
    • Deduction per payslip - The recurring amount to be deducted per payslip. 
    • Reference - A reference number or some detail for the deduction (e.g. reference number for child support, date of overpayment, etc). 
    • External reference - Used as a reference for external systems. This is not visible to the employee. 
    • Comments - Notes and details are visible only to the admin. 
  6. If a threshold is required, select the Include threshold checkbox.
    • Threshold Amount - This amount of gross income must be earned on the payslip before the deduction is applied.  
  7. Select Save.
    • Once saved, any draft payslips at or after the period start date will automatically be reprocessed to apply the deduction. 

Applying a deduction on an Employee Profile 

Deductions can be set up on employee profiles, allowing for automated deductions to take place. This is the preferred method of handling deductions.

The benefits of using this method are:

    • The deduction will automatically flow through to payroll. 
    • The deduction can be paid into a separate bank account. 
    • The deduction can be split into manageable, per-cycle amounts. 
    • Deductions can be set up to recur indefinitely or to a specified date. 
    • Deductions can be managed outside of payroll.

 

Apply a deduction on an Employee Profile

To apply a deduction to an Employee Profile:

  1. Navigate to the employee's profile. This can be done from People > Approved People or via the global search bar. 
  2. Select on the Financial tab.
  3. Select the Deductions tab > Add Deduction and make your selection from the following:
    • One-off - Total amount paid from a singular payslip.
    • Instalments - A total amount paid over multiple payslips.
    • Recurring - No total amount repeats over a timeframe.
    • Protected earnings deduction - Enforces protected earnings; for more information, select here. 
  4. Complete the deduction details:

      Please note    : Depending on the deduction type you choose, some of the below fields may not appear. 

    • Deduction type - Select from your configured deductions and salary sacrifices. 

    • Account name - Name of the account the account the deduction is to be sent.
    • BSB - Account BSB for the deduction recipient. 
    • Account Number - The number of the external account to which the deduction is to be sent.
    • Pay period/ Starting from - Specify the payslip or period the deduction commences. 
    • Recur until - The period ending the deduction will end on.
      • If no date is specified the deduction will recur indefinitely. 

    • Total Amount - The total amount to be deducted.

    • Instalments - The instalment amount is to be deducted per payslip.
    • Deduction per payslip - the recurring amount to be deducted per payslip. 
    • Reference - A reference number or some detail for the deduction (e.g. reference number for child support, date of overpayment, etc). 
    • External reference - Used as a reference for external systems. It is not visible to the employee. 
    • Comments - Notes and details are visible to the admin only. 
  5. If a threshold is required, select the Include threshold checkbox.
    • Threshold Amount - This amount of gross income must be earned on the payslip before the deduction is applied.  
  6. Select Save.
    • Once saved, any draft payslips at or after the period start date will automatically be reprocessed to apply the deduction. 

  

Applying a deduction to a payslip 

Some deductions can be applied directly to payslips. Instances where you may choose to do so include:

    • Adding a deduction to a processed payslip or adjustment. 
    • Last-minute deductions before processing payroll. 

To apply a deduction directly to a payslip:

  1. Navigate to Payroll > Pay.
  2. Locate the payslip, using the search functionality or filters if required. 
  3. Select the down arrow next to the payslip ID > Edit.

  4. Select Add Deductions. A deductions section will appear below. Enter the % or $ amount based on the deduction type.

  5. Select Calculate Totals and Preview PDF to check everything is correct.
  6. Select Update Payslip. 
  7. Enter a reason for your update and select Save Changes.

  Please note: Deductions that are configured to pay into a separate account may not be added directly to a payslip. These must be added to an employee's profile or from the Deductions page. Alternatively, the bulk deductions import can be used to add these to payslips. 

 

Using the Bulk Deductions import

The Bulk deductions import allows the user to add, remove, or update deduction amounts in bulk from the Pay page.

This CSV Import can be used to: 

    • Manage large amounts of fluctuating deduction amounts that are applied every pay period. 
    • Remove existing deductions on draft payslips or add new ones. 
    • Add 'pay to another account' deductions to a payslip without needing to apply it in the Employee Profile first. 

  For more information on using the Bulk Deductions Import please read this article.

Ending deductions *NEW

In some cases, you may need to end a deduction; these can include:

    • Policy changes.
    • Promotions.
    • The deduction is no longer required.

The most common case will be when a deduction requires an update, as after a deduction has been added to an employee, only the reference, comment, and recur until fields can be edited. 

As such, If a deduction needs to be updated in amount or type, the current deduction will need to be ended, and a new deduction will need to be applied.  

This will be the use case for Recurring deductions as One-off, and instalment deductions will automatically end when the total amount value is reached. 

Deductions can be ended in 2 places, and it will be based on the admin's preference how you choose to end the deduction, the result will be the same from:

    • The main Deductions page
    • An individual Employee profile

 

End a deduction from the Deductions page

If you prefer to end a deduction from the Deductions page, this can be done quickly and easily.

To end a deduction:

  1. Navigate to the Deductions page, by navigating to the quick menu > Payroll > Deductions. 
  2. Use the search filters to locate the employee, and then the ellipsis. 
  3. From the dropdown menu, select End.
  4. Add your reason for ending the deduction (Optional) and select End Deduction. 

 

End a deduction on an Employee Profile

If you would like to end a deduction from an Employee profile, this can be done quickly and easily.

To end a deduction:

  1. Navigate to the employee's profile. This can be done from People > Approved People or via the global search bar. 
  2. Select the Financial >  Deductions tab and then the ellipsis. 
  3. From the dropdown menu, select End.
  4. Add your reason for ending the deduction (Optional) and select End Deduction. 

Reporting & FAQs

Deduction History and Exporting Deductions *NEW

When it comes to maintaining track of your deductions and staying informed about any changes, you will have two essential features at your disposal.

You can use the deduction history and the export function to stay organized.

Deduction History

One key feature when managing deductions is the ability to track the progress and history of a deduction. This is beneficial for maintaining an audit history of deductions. The history of a deduction can include:

    • When the deduction was created
    • Payment dates
    • Payslip ID
    • Amount paid per period
    • Edits to the deduction (comments, references are updated and who by) 
    • Running total paid
    • End dates

The deduction history can be viewed from the Employee's Profile and the Deductions page. 

How to view the deduction history:

  1. Navigate to the Employee's Profile > Financial > Deductions or the Deductions page. 
  2. Locate the required deduction and select the ellipsis > History.
  3. This will open a drawer with the deduction's history; select the X to close. 

Exporting Deductions

The Deductions page serves as the central hub for all employee deductions. You can easily track all deductions, both active and ended, by using an export.

To export employee deductions:

  1. Navigate to the Deductions page by navigating to the quick menu > Payroll > Deductions. 
  2. Apply your filter, to export both active and ended deductions please ensure both badges have been selected.
  3. Select the Export button, located at the top-left of the screen. 
  4. You will receive a notification once your export is ready for download. 

Processed Deductions Report

The processed deductions report will highlight all of the deductions that have been processed based on the criteria you specify. The data returned will reflect what has been processed on payslips. This includes deductions that are added or edited directly on the payslip. 

To run the Processed Deductions Report:

  1. Navigate to Reports > Financial > Processed Deduction Report.
  2. Select the Duration (date range) and add your Group By options. The available groupings are:
    • Month
    • Payslip ID
    • Employee ID
    • Office Code ID
    • Reference
    • External Reference
    • Deduction Type
    • Period End
    • Batch
  3. Optionally filter by:
    • Employees
    • Operations
    • Office Codes
    • Specific Deductions
    • Batch
  4. Optionally mark the checkboxes:
    • Cash Basis - With this selected, the payment date of the payslip will be used with your date range. With this deselected, the period end date will be used. 
    • Exclude totals in Export
  5. Select Submit to run the report.
  6. You can then Export to CSV, PDF, or print if required. 

Unprocessed Deductions Report

The unprocessed deductions report will highlight all of the outstanding deductions that are applied to employees. The data returned will reflect what has been configured on employee profiles only. Deductions added to or edited on payslips will not be returned. 

To run the Unprocessed Deductions Report:

  1. Navigate to Reports > Financial > Unprocessed Deduction Report.
  2. Optionally filter by:
    • Employee/s
    • Office Codes
    • Specific Deductions
  3. Select Submit to run the report. 
  4.  The following data will be returned:
    • Employee ID - The ID of the employee with the deduction applied. 
    • Employee - The name of the employee. Selecting the name will take you to their profile. 
    • Office Code ID - The ID of the office code applied to the employee. 
    • Office Code - The name of the office code applied to the employee. 
    • Remaining To Pay - The value remaining to be deducted from the employee. This will only populate when deducting a small amount per cycle until a larger value has been withheld.
    • Amount - The total value of the deduction. A recurring deduction with no limit will display the recurring value, not a total. 
    • Recurring Till - How long the deduction is valid for. 
    • Per Cycle - The value to be deducted per pay cycle. This will only populate in two situations:
      • For protected earning deductions. 
      • When deducting a small amount per cycle until a larger value has been withheld. 
    • Deduction Type - The name of the deduction applied to the employee. 
    • Reference - A reference added to the deduction. 
    • Comments - A comment added to the deduction. 
  5. You can then Export to CSV, PDF, or print if required. 

FAQs

If my employee has a pay period without pay, how will the ATO know that they haven't missed a child support payment?

In the case of any active employees with child support obligations (protected earning deductions) that aren't paid during the pay period, your foundU platform will automatically generate a 'Update' STP packet.

Once you submit STP, your platform will communciate the employee's nil earnings to the ATO using STP. No further action is required by your payroll team.

Why is my deduction not showing on the payslip?

If you've set up your deduction type and the deduction for the employee and your deduction is still not showing up on your employee's payslips, you can check the below sections:

  • If you have added a deduction to an accepted timesheet, have you reprocessed that payslip via selecting the draft payslip > Select payslip > Reprocess.
  • Is the deduction to be paid into another account? If so this account will need to be added to the employee's profile first. Please note that another account will not appear for manual payslips.
  • Deductions paid to another account cannot be paid retrospectively (i.e. added to a previous pay adjustment of the past pay period).
  • Please note that once a deduction is processed it cannot be removed from the original i.e. cannot reverse deductions.
  • If you have your deduction type showing on your edit payslip/ or create adjustment and you enter in an amount, if you don't see the deduction on your payslip preview ensure to check:
    • The total amount of the payslip e.g. $200
    • Compare that amount with the deduction in the employee's profile (and check if there is a threshold amount) if the payslip is less than the threshold the deduction will not flow though (which is correct). E.g. threshold is $300 (the deduction will only trigger if the gross amount is greater than this figure).

I need to change a deduction type from Pre-tax to post-tax or vice versa; what do I do?

Once a deduction type has been saved, the method (dollar or percentage) and deduction type (pre or post-tax) cannot be edited for compliance purposes.

If you need to update the deduction type, you will need to create a new deduction (e.g., post-tax deduction) and archive the previous deduction (e.g., pre-tax deduction).

My deductions STP category is incorrect. Can I change this?

Yes! An STP catagory can be updated and applied for a financial year.

Before you start, please note that STP category changes once made will affect the following:

  • The full financial year that is selected
  • All payslips on all employees

For more information please refer to the Change the STP category of a deduction section above. 

Can I edit a deduction that has already been applied to an employee?

Yes, you can edit a deduction to update the comments and references.

If you need to update the amount or deduction type, you will need to end the current deduction and add a new deduction to the employee.

Please refer to the Managing deductions in bulk or Applying and ending a deduction on an Employee Profile sections above for more information. 

How do I set up a Salary Sacrifice for superannuation?

Your platform can apply a salary sacrifice for superannuation to an employee, but this is done through a different process.

For information on how to apply a salary sacrifice for super to an employee's profile, please refer to the article linked here.

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