This help guide will explain deductions in Tanda, including how to create deductions and how they appear on pay runs, pay slips, and ABA files.
What is a Deduction?
Deductions are used to deduct money from an employee’s gross pay based on either:
a) Agreements between the business and employee;
b) Or if it’s genuinely beneficial to the employee.
Common examples of deductions include:
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 guide)
Relevant STP category
Use the tick boxes to confirm if the deduction:
Reduces PAYG Withholding
Reduces payroll tax
Reduces super
Tick whether the deduction should use individual bank details for each employee, otherwise enter the bank details the deduction should be paid to in the ABA file. Learn more about individual bank details below.
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 the section 'How Deductions appear on ABA Files' at the bottom of this article for more details.
Individual Bank Details
Ticking 'Use individual bank details' will remove the bank details section from the Deduction Type itself. Instead, you will enter bank details on the employee's profile when adding an automatic deduction.
This is used for deductions such as charity deductions, where the amount from each employee with this deduction is paid to different accounts.
To do this, ensure you tick the following setting in the Deduction Type (Payroll > Payroll Settings > Deduction Types).
Then, when you add this deduction type to an employee profile under the Payroll tab, there will be a section to add Individual Bank Details.
Recurring Deductions
Payslips will automatically be populated with Deductions added to 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 Workforce > Staff
Select the employee from the list
Navigate to the Payroll tab
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
Enter a Deduction Cap (maximum amount to be paid) if applicable
Enter the start/finish dates that the deduction should apply to, if applicable
Tick if the deduction should be included in the ABA file
Click the Create button
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
To manually add a deduction to a payslip, find the Deductions section of the payslip and click + Add.
How Deductions Appear on Payslips
Payslips can be previewed in each employee’s individual payslip by clicking Preview Payslip File.
And will be shown as follows:
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 be allocated 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.
FAQ
Will the Protected Earnings Amount (PEA) Be Enforced on Recurring Deductions?
Will the Protected Earnings Amount (PEA) Be Enforced on Recurring Deductions?
Yes, the Protected Earnings Amount will be applied based on the STP category of the deduction to align with the regulatory requirements set by Services Australia. Here’s how it works:
Earnings Below PEA: If an employee’s gross earnings for the pay period are below the Protected Earnings Amount threshold, child support deductions will not apply. This safeguard ensures essential earnings are protected for employee welfare.
Earnings Above PEA: For earnings that exceed the threshold, deductions are applied automatically based on the configured amounts.