Deduction Management
Overview
This section deals with the Deductions that are applied to an employee’s earnings. There can be many types of Deductions that must be taken into account when processing an employee’s pay. Deduction Management consists of actions that serve to attribute one or multiple deductions to an employee for specified periods of time. Deductions can be created by Payroll Management and assigned to an employee through the screen 'Automatic Deductions Screen' or 'Deductions Per Period'.
Benefits
Deductions Management establishes a deductions database that serves for organizational processes. This allows upper management to conduct monitoring and analysis of all earnings that have any type of deduction coded in this section. Third party payments, such as Provincial and Federal Income Tax, can be processed more effectively and in a timelier manner with this database that monitors all deductions activity. The payments can be delivered with a higher degree of confidence that can help guarantee compliance to the payment schedule.
Workflow
The Deductions screen stores all deductions within an organization by code. The user can type a deduction code in the appropriate field and then the Deduction function will display all available details regarding that particular deduction. The screen also allows the user to search deductions with a linked cost item, which is displayed at the bottom of the screen. Refer to Deduction for more information.
The Income Tax Destination screen deals with the location each income tax deducted off an employee's earnings will be transferred to. This function ensures that third parties are paid on time on a regular schedule.
The Income Tax Type function is available for the user to view all the different income taxes that could be applied to payroll calculations. Management can select certain income tax types that are only applicable to certain employee earnings and assignments. All income tax types are coded for ease of access so they can be searched and modified without difficulty. Refer to Income Tax Type for more details.
The Pension Fund function deals with pension fund types available to employees. Each pension fund will have unique specifications which can be viewed in the Pension Fund screen. Pension Funds play a very important part in payroll management. Pension funds provide financial security for employees when they retire, that is why deductions from employee earnings must be managed effectively. Refer to Pension Fund for more details.
Deductions
Overview
Deductions are another key factor part of the Payroll Management Section. It reduces the total gross amount computed in employee earnings applicable in a given pay period. Earning codes can be searched, added, modified and deleted in this function. Each deduction can contain many details pertaining to calculation methods, activity status, minimum and maximum deduction amounts, pension administration etc. The earnings minus deductions defined for an employee gives payroll management the net pay to be applied. As earnings and pay are affected by Deductions, this function is another calculation aspect that directly relates to cost items mentioned in the Cost Item Management section. A separate section in this function deals with the cost item and deduction relationship for deduction calculations.
Navigation
Payroll Management ► Support Entities ► Deduction Management ► Deductions
Deductions screen Fields and Tabs
Field | Description |
Code | ID for the Deduction. It is a system generated code. |
Active | By Default, is checked and indicates that Deduction has been previously used in Payroll Calculations. Active can be unchecked so that it is not taken into account in future. |
Employer Share | Indicates if Deduction is an employer Deduction. |
Effect on pay | By Default - is checked. Indicates if the deduction affects the pay. Normally, employer's deductions do not affect the pay. |
Printed on Pay Stub | If checked, deduction will be printed on pay slip. |
Apply Penalties | If checked, a Penalty will be applied affecting Deductions. |
Allow Arrears | If checked, Arrears will be applied to Deductions. |
Reduce Arrears | By Default - unchecked. Select box if required. See Arrears for more details. |
Cost Item Coding Block | If checked, the Coding Block distribution for specified Deduction will be considered on Cost Items. |
Deduction Coding Block | If checked, the Coding Block distribution for specified Deduction will be considered on other Deductions. |
Mandatory | If checked, Deduction will be mandatory. |
| Allow More Than Once Same Deduction On Same Employee Assignment | Default value is FALSE.If this value is true, system will allow same deduction code in automatic deductions within same Employee Assignment |
| Allow To change Vendor In Automatic Deduction | Default value is FALSE. If this value is TRUE, then system will allow to change default vendor in Automatic Deduction |
| Is Retroactive Pay Period Mandatory In DPP | Default = FALSE. When TRUE, in DPP the field Retroactive pay period is mandatory. |
| Legacy Reference | Defines the Legacy Reference associated with the Deduction. |
Inactive Date | By default, this field is empty. Indicates when Deduction is no longer available. Once Active is checked, Inactive Date will produce current date. |
Calculation Sequence | Calculation sequence to ensure that the calculation is processed in the right order. |
Deduction Tax Type Value | This menu will automatically display Employer Taxable when Employer Share is checked. Deduction Tax Type Value will automatically display Tax Credit and Tax Exemption when Employer Share is not checked. |
| Is Pension | If it is true then this Deduction is used Reduction Deduction entity. |
| Is Retroactive pension | This boolean is used when the keyword 'sumretropension' is used in the formula of Reduction Deduction entity. |
| Is Basic Only Tax | This boolean is used when the keyword 'sumbasiconlytax' is used in the formula of Reduction Deduction entity. |
| Recovery tax code | Official Code that will be used to print on tax forms in Canada. |
Deduction Type | This will specify a specific Type of Deduction for calculation purposes. |
| Deduction type for reports | Default NULL |
Vendor | To define the vendor for Deduction to be slected from the lookup button. |
Based on Deduction | To define the deduction base for Deduction to be slected from the lookup button. |
Minimum Hours | Minimum hours for this deduction to be applied. |
Reduction Tax | Percentage of reduction on taxes. |
Rate | Percentage Rate of Deduction. |
Amount | Deduction Amount. |
Maximum Reduction | Maximum reduction amount. |
Exemption | Exemption amount before this deduction is to be applied. |
Minimum Salary | Minimum salary for this deduction to be applied to. |
Maximum by Pay | Maximum Deduction amount per pay. |
Monthly Maximum Amount | Maximum Deduction allowed per month. |
Annual Maximum Amount | Annual maximum Deduction allowed. |
Maximum Age | The age at which the Deduction should stop. |
Name | Description of the Deduction. |
Description | Detailed description of the deduction. |
Pay Stub Text | Any other additional text, besides the deduction description, that should be printed on the pay stub. |
Explanation | Detailed description of the deduction or any other useful information regarding the use of the deduction. |
Inactive Reason | Explanation on why the deduction is not being used. |
Loan | If checked, Loan amount will be adjusted from employee’s deduction. |
Loan Interest | If checked, Loan Interest amount will be adjusted from employee’s deduction. |
Interest Type | To select the interest type which can be Simple or Compound. |
Financial Coding Block Credit | Financial Coding Block for Credit. This entry is optional. If not entered, the default code is used from Cost Items or Automatic Cost Items. If there is no Cost Items coding, it will come from Employee Assignment. |
Financial Coding Block Debit | Financial Coding Block for Debit. If not entered, the default code is used from Cost Items or Automatic Cost Items. If there is no Cost Items coding, it will come from Employee Assignment. |
Retroactive Payment Deduction | Allows retroactive deductions for payment. |
Deduction Cost Items Tab | It lists the deductions and cost items relationship for deduction calculation. It is available from the cost item form and from the deduction form. |
Reduction Deduction Tab | Uses for reduction any other created Deduction from the current Deduction. |
Institution Tab | Allows selecting the institution for deduction. |
Income Tax Type
Overview
Income taxes are one of the main deductions used towards an employee's earnings. These income taxes that will be used are divided by the different types they fall under. All available income tax types are listed in this function and retrieved on a regular basis when doing payroll calculations. One calculation might specify a certain type of income tax that could be different from other calculations. The user will able to search and retrieve that specific income tax type and view its associated details such as the name and explanation of use. All deduction calculations are processed with a certain income tax type code which is stored in this function.
Navigation
Payroll Management ► Support Entities ► Deduction Management ► Income Tax Type
Income Tax Type screen Fields
Field | Description |
Code | ID for the Income Tax Type. It is a user given code. |
Active | If checked, the Income Tax Type is available. |
Name | Description of the Income Tax Type. |
Description | Detailed description of the Income Tax Type. |
Income Tax Destination
Overview
The income tax destination function organizes all the different types of taxes that can be applied to a cost item. For instance, an employee's earnings will be subject to deductions as discussed in the Deductions function. These deductions can take the form of a Federal tax, Provincial tax, etc. Each type of deduction will have a unique identification code with associated content displaying details such as a name for the deduction and a brief description explaining its intended use. A separate section, called the Income Tax Destination Details, displays even further, in another screen, more details about that specific deduction. Any information regarding the deduction type, amounts and the fiscal year being applied to the deduction can be viewed in this screen. It also allows the ability to enter or change information in these fields if a deduction is being created or modified.
Navigation
Payroll Management ► Support Entities ► Deduction Management ► Income Tax Destination
Income Tax Destination screen Fields and Tab
Field | Description |
Code | ID for the Income Tax Destination. It is a user given code. |
Active | If checked, the Income Tax Destination is available. |
Is Fixed Amount Mandatory | If checked, indicated Fixed Amount is mandatory. |
| Has Mandatory Cost Items | |
Basic Personal Deduction | Basic personal amount which is exempted from tax. |
Frequency | Frequency may be Annual or Pay Period. |
| Taxable Amount Calculation Strategy | Values are: SUM ALL Cost Items, SUM ALL CI regardless of institution, Treat each CI INDIVIDUALLY |
| Forecast Taxable Amounts based on Actual Periods | When it is true it allows user to forcast taxable amounts based on actual periods. |
| Employees with incomplete Fiscal Year are Forecasted on full Fiscal Year | When it is true it allows user to Forecasted on full Fiscal Year |
No of Pay Periods For Fixed Amount | This attribute is needed only when a fixed amount is entered in the income tax destination detail is entered instead of a rate and constant. The number that is entered in here will be used to divide the fixed amount. |
Personal Credit Rate | Rate applicable when calculating tax destination amount. |
Name | Description of the Income Tax Destination. |
| Language | Country specific language used to register the descriptions. |
Description | Detailed description of the Income Tax Destination. |
Income Tax Destination Details Tab | Uses to provide details about Income tax Destination. |
| Cost Item | Collection of 0 to many. |
Income Tax Destination Details Tab
Overview
It defines the Income Tax Destination Details. It has the possibility to define the different ranges.
Income Tax Destination Details Tab screen Fields
Field | Description |
Effective Date | This is the date that the rates become effective. When calculating the tax, the system must find the effective date of the Pay Period. |
Minimum Amount | The minimum amount of the Income Tax Destination. |
Maximum Amount | The maximum amount of the Income Tax Destination. |
Rate | Rate applicable for the calculation of the income tax. Either Rate or Fixed Amount is mandatory. |
Fixed Amount | Fixed amount of the Income Tax. |
Constant | Constant amount of Income Tax if any. |
Income Tax Type | The type of Income Tax. |
Pension Fund
Overview
A pension fund is a function formed by a pool of assets whose purpose is to finance pension plan benefits. These benefits are created by contributions taken from employee earnings. The contributions are a type of deduction managed with cost items. They are normally a standardized percentage that is to be taken from the employee pay and put into one type of pension fund. An organization can have different types of pension funds directed at employees with different types of positions within an organization. This screen lists and organizes the different types of pension funds that will be used when calculating deductions. Each pension fund type is recorded by an ID and provides the name of the pension fund and a description of the fund. A separate section within this function called Pension Fund Details, provides monetary details regarding the pension fund such as minimum and maximum amount of the pension.
Navigation
Payroll Management ► Support Entities ► Deduction Management ► Pension Fund
Pension Fund screen Fields and Tab
Field | Description |
ID | System generated code for the pension Fund. |
Active | If checked, the Pension Fund is available for use. |
Name | Name of the Pension Fund. |
Description | Detail description of the Pension Fund. |
Pension Fund Detail Tab | Stores the information about pension fund details such as amounts and rates. |
Pension Fund Details Tab
Overview
Field | Description |
Minimum Amount | The minimum amount of the Pension Fund. |
Maximum Amount | The maximum amount of the Pension Fund. |
Rate | Rate applicable for the calculation of the Pension Fund. Either Rate or Fixed Amount is mandatory. |
Constant Amount | Constant amount of Pension Fund if any. |