This help guide will explain how to configure and apply deductions using Tanda Payroll NZ, including information about what deductions are, how to create deduction types, how to apply deductions to employees, and how deductions appear on pay runs and payslips.
What Does This Help Guide Cover?
What are Deductions?
Deductions are a post-tax deduction from an employee’s take-home (gross) pay. To be eligible, employees must have completed an IR330 - Tax code declaration form. The tax code your employee uses will depend on their work type and situation.
If your employee does not submit a completed IR330, you need to deduct PAYE at the 45% non-notified rate.
Common examples of deductions include:
Child Support Payments
KiwiSaver Employee Contributions
Repayments of purchases made through the company
To learn more about deductions, see this resource from the Inland Revenue Department (IRD).
Configuring Deduction Types
To configure different deduction types in your account, navigate to Payroll > Payroll Settings > Deduction Types > + New.
From there, you should see the following screen:
To create a new deduction type, fill out the following details:
Name the deduction (e.g. ‘Child Support’).
Select the appropriate journal account (if you haven’t already, configure these via Payroll > Payroll Settings > Journal Setup (Accounts) > + New).
Choose the category (Child Support, Payroll Giving, Other).
Select an IRD Payment Code if applicable.
Bank Details
If you want to provide bank details to have deductions paid directly into bank files, you have two options. You can either set the bank details in the Deduction itself, or set individual bank accounts on employee profiles.
Setting Bank Details at the Deduction Type level
This method means bank details are shared across all employees using this deduction.
To do this, either when creating the deduction or when editing the deduction, fill out the fields under Deduction Type Bank Details.
Setting Bank Details at the Employee level
This method means bank details are specific to each employee's individual needs, and are entered in the employee profile, rather than in the Deduction Type.
To do this, tick the 'Use individual bank details' setting and save changes. Doing so will allow unique bank details for each employee this deduction is added to.
For IRD deductions (deductions with an IRD code set): Details auto-populate based on the employee's IRD number
For non-IRD deductions: Manually enter bank details per employee in their profile.
Applying Deductions to Employees
Once configured, payslips will automatically populate with Deductions that have been added to employees' profiles. Once a Deduction Type has been created (following the steps above), you can add it to employees’ profiles by following these steps:
1. Navigate to Workforce > Staff > click into the employee's profile > Payroll > Payroll Details.
4. Locate the Deductions heading and click +Add.
5. Input the appropriate details, including:
The payroll deduction type.
Whether this is a fixed amount deduction or a deduction as a percentage of the employee’s income.
If you want to cap the total deduction amount, enter a Total Amount To Be Paid. If you enter a value in this field, Tanda will stop applying the deduction once that amount is reached. As each pay run is posted, the "Amount paid so far" total displayed here will update.
Dates that the deduction will apply from or to (optional).
The appropriate bank details, if the deduction is not an IRD deduction, and is configured to use individual bank details.
Click Create to save your changes.
Unless otherwise specified (by setting ‘to’ or ‘from’ application dates or setting a deduction cap), the deduction will now apply to the specified employee indefinitely.
How Deductions Appear on Pay Runs
After assigning deductions to the relevant employees, they will appear on their Pay Runs.
To view deductions on an employee’s Pay Run:
Navigate to Payroll > Run Payroll.
Select an employee from the list.
Scroll to the ‘Deductions’ section.
If necessary, you can also manually add or delete deductions from an employee’s pay run from this view. To do so, click the +Add or DELETE buttons. If you attempt to delete a deduction, you will see the following warning asking you to confirm your selection:
How Deductions Appear on Payslips
Admins can also preview each employee's payslip by navigating to Payroll > Run Payroll, selecting an employee from the list, and clicking ‘Preview Payslip File.’
Deductions will appear near the bottom of an employee’s payslip as follows: