Deductions

Path: Master-Update Tables-Deductions

Deductions may be defined at several levels. Initially two are used - General Deductions, and Employee Deductions. The selection of deductions for processing and the order in which they are processed are controlled in several ways. Deductions can only be generated by the computer after all associated earnings have been posted.

Deduction Type

Although referred to as Deductions, the definitions apply to a standard class of calculations used to process payments. The Deduction Type indicates how the calculated employee amount is applied:

• I - Added to cheque amount as an income
• D - Subtracted from cheque amount as a deduction
• S - Special case that does not affect the cheque amount. One use is for vacation accruals

A Conditional Deduction is used to link Employee deductions to Department Deduction Sets. When active it generates a D type deduction.

Calculation Type

There are a number of preprogrammed calculations which can be used. If the Calculation Type is not one of these, it is used to create a program name which is then called to perform the calculation. The program name is PRD followed by the Calculation Type. Preprogrammed calculations include:

• Blank - It is used only for a Conditional Deduction for an employee. It indicates that this employee has the conditional deduction and that the remaining fields all come from the general deduction definition. None of the remaining fields on this particular Employee Deduction entry are used anywhere.
• A - Simple amounts
• AI - Advance issued is a reserved type with no programmed support.
• IH - Percents of Total whole hours.
• LTD - Standard Long Term Disability.
• R - Percents of Regular earnings.
• RH - Percents of Regular hours.
• T - Percents of Total earnings.
• TH - Percents of Total hours.
• VA - Vacation accrual based on vacationable earnings. Accrual appears in Units.
• VI - Vacation accrued based on vacationable earnings and paid immediately. Amount appears in Employee amount. This pay qualifies as UIC earnings. As such it must be calculated and allocated for each UIC week. The Period End Date is the end date for a UIC week. Each earnings transaction is assumed to apply fully to the week in which its Effective Date falls. The vacation pay is calculated for each week with earnings and a separate income transaction is generated. The UIC generator can then allocate these transactions to the appropriate weeks to determine earnings qualification.
• VP - Vacation payout based on current accrual. If an Employee amount is provided then it is subtracted from the current accruals, otherwise the total current accrual is paid out. For UIC purposes this amount is allocated to the last week of the pay period.

Amounts

Four values are assigned to each deduction. They are used as follows:

• Employee Amount - Value used to calculate the Employee's deduction amount.
• Employer Amount - Value used to calculate the Employer's contribution.
• Taxable Benefit - Value used to calculate the Taxable Benefit assessed to the employee.
• Units - Value used to calculate the units associated with the deduction. For life insurance it could be the Insurable Earnings.

T4 Boxes

A T4 box can be assigned to each of the above amounts. It is used to put the annual total for that amount for the deduction into a box on the T4 form. The T4 boxes are defined in the General Payroll table T4.

Distributions

Two Distribution codes are assigned to each deduction, loosely referred to as the Debit and Credit codes. In the case of a deduction. They are used as follows:

• Debit - the expense account for Employer amount.
• Credit - the payables account for both Employee and Employer amounts.

In the case of an income they are used as follows:

• Credit - the payables account for Employer amount.
• Debit - the expense account for both Employee and Employer amounts.

Reserved Codes

A few functions are coded to look for specific calculation codes, to ease initial programming. These are usually general deductions. These codes include:

• CPP - Canada Pension Plan
• TAX - Income Tax
• UIC - Employment Insurance Premiums
• ZAI - Automatic Advance Issued when a cheque goes negative. If it is not in place, you must insure that cheques do not go negative.
• ZBK - The Bank Account for the General Ledger. Future additions will begin with Z to minimize restrictions on user-defined codes.