What is a deduction?
Deductions are used to deduct money from an employee’s gross pay, based on agreements between the business and employee, or if it’s genuinely beneficial to the employee.
Common examples of deductions include:
Salary sacrifices
Child Support Payments
Repayments of purchases made through the company
Certain industry awards will specify other authorised deduction scenarios.
Create a Deduction Type
Navigate to Payroll > Payroll Settings > Deduction Types and click the + New button.
When creating a new Deduction Type, enter the following fields:
Name (as it will appear on the payslip)
Payroll account (choose from any accounts set up in your journal. If you're not sure check out our Configuring your payroll journals help article)
Relevant STP category
Use the tick boxes to confirm if the deduction:
Reduces PAYG Withholding
Reduces payroll tax
Click the Create button once finished to save the new deduction.
You can also configure how this looks on your ABA File through the "Bank details" section. See How Deductions appear on ABA Files at the bottom of this article for more details.
Recurring Deductions
Payslips will automatically be populated with Deductions added on employees' profiles. Once a deduction has been created (using the steps in Create a Deduction Type), add it to the profiles of the applicable employees with the following steps:
Navigate to Payroll > Staff
Select the employee from the list
Click + Add next to the Deductions section
Select the relevant Payroll Deduction Type from the drop down list
Enter the Fixed amount or Percent of income to be deducted
Click the Create button
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How deductions appear on pay runs
After assigning deductions to relevant employees, the deductions will appear on their pay runs.
To view the applying deductions:
Navigate to the current pay run through the Run Payroll tab
Select the employee
Scroll down to the "Deductions" section
How deductions appear on payslips
Payslips can be previewed in each employee’s individual payslip by clicking on the .
And will be shown near the bottom of the payslip here:
How Deductions appear on ABA Files
Deductions will be added to their own line only if:
The "Pay in ABA" option has been ticked on the deduction line in the payslip
And either:
The deduction has a bank account allocated
The deduction has an STP category of "Child Support Deduction" or "Child Support Garnishee"
If the STP category is allocated to "Child Support Deduction" or "Child Support Garnishee", the bank account will allocate as below:
Account name: Services Australia
BSB: 092-009
Account Number: 116755
If the STP category is not allocated to "Child Support Deduction" or "Child Support Garnishee", the bank account will allocate as per the Bank details on the Deduction Type.
If the Bank Details are blank and the STP category is not allocated to "Child Support Deduction" or "Child Support Garnishee", nothing will show on the ABA file. No additional line will be added.