Eclipse Payroll v9.9+


Introduction

If you get a notice to deduct child support for one of your employees, you’re required under law to comply. In Eclipse Payroll, there are two ways you can manage Child Support Deductions (CSD).

With either method you will need to set up a Deduction of Type Child Support Deduction to handle the payment of the child support. But there are now two ways to administer the CSD in the Payrun: either the current way or you can combine this approach with some new features we have introduced to help you manage CSD. In other words - you can either continue managing Child Support Deductions as you do now, or you can adopt the new features to make the process a little easier.

IMPORTANT

It's your responsibility to ensure the CSD has been applied in accordance with the legislation. The system will not do this for you! The new features will only assist with this.


Existing Method for applying Child Support Deductions

Up until version 9.9 of Eclipse, you managed your CSDs as follows: 

    1. Create the Child Support Deduction.
    2. Attach the new Deduction to the Employee and set it to Auto-Apply in the Payrun. The Amount of the Deduction should be set to the amount you have been advised to deduct each Pay Period.
    3. In the Payrun, check that the Child Support Deduction has been applied correctly according to the legislation.
      1. Ensure the CSD is for the correct amount, or is LESS THAN the correct amount for valid reasons, or is been specified as ZERO for valid reasons..
      2. Ensure that the PEA (if you have been supplied with one for this Employee) has been correctly observed.

You can continue managing CSDs in this way. Or you can adopt the new features explained in the next method. 


New method (v9.9 on) for applying Child Support Deductions (and handling the PEA). 

    1. Create the Child Support Deduction. Give it a generic name. You will use this Deduction for any Employee with Child Support. Set it's Fixed Value to $1.00.
    2. Attach the new Deduction to the Employee and set it to Auto Apply in the Payrun. Ensure it's Fixed Value is $1.00.
    3. In the Tax Variation/ Child Support Tab in the Employment section of the Employees card, enter the following using the Child Support information you've been supplied for the Employee:
      1. Child Support Deduction Amount: this is the dollar value of the Deduction to be applied each Pay Period.
      2. The Protected Earnings Amount. This may also be supplied and is the amount of an Employees (NET) Pay that is exempt from Child Support Deductions.



Note that if you follow these instructions for using the CSD/PEA fields in conjunction with the Child Support Deduction and the Deduction is set to $1.00 you will see a message indicating the CSD is being used in the Deduction itself, as per below:



Note the following changes to the way the Payrun validates Child Support Deductions when the new CSD/PEA fields are set.

      1. If you set a CSD value greater than zero in the Employee Card, then the system will assume a Child Support Deduction for the CSD Amount specified is required in the employees Pay and will warn you when you Commit or Save the Pay if the Deduction:
        1. Has not been applied at all.
        2. OR If the Deduction Amount is not equal to the CSD Amount set in the Employee's file.
      2. if you have also set a PEA Amount, the System will warn you if the Employee's NET pay:
        1.  is less than the PEA.
      3. Note also that if either the CSD or PEA is set, then this is displayed at the top left of the Employee's Pay Card, as shown below. You will not see these fields unless they have a value greater than zero:


Here is an example Warning. These can appear anytime you Save or Commit a Pay:

Rules for Applying Child Support Deductions


Irrespective of the method you are using to manage CSDs the rules are the same.

The difference is you will NOT receive ANY CSD/PEA warnings unless you are using those fields in the Employee Card to track CSD obligations.


Can the CSD deducted be LESS THAN the required Amount?

Yes. This can happen if the Employee does not have the funds in their Pay to accommodate the full CSD Payment. In this case you are required to deduct what's available. 

Can an Employee have a CSD but no PEA?

Yes. In some cases you will not be advised a PEA amount for an Employee with a Child Support Deduction. In such cases you should set the CSD value but leave the PEA as zero.

Can an Employee's NET Pay ever be LESS THAN the PEA?

Yes. This can happen if you have Deductions in the Employee's Pay OTHER than the CSD. This is explained below. 

When do I apply the Child Support Deduction? At what point in the calculation of the Pay does it get deducted?

CSD deductions take precedence over all other Deductions in a persons pay other than:

  1. PAYG Tax
  2. AND General Salary Sacrifice (before tax) deductions that are NOT related to Superannuation. 

This means when calculating the amount available for paying Child Support, you should deduct Tax and any General Salary Sacrifice deductions from Gross first, then determine if the CSD can be paid and set the CSD Deduction amount appropriately.If the full amount can be paid, it should be. If not, pay as much as is possible.

What effect does the PEA have on the calculation of the CSD?

If the Employee has a CSD and a PEA specified in their Child Support Schedule, then the amount of funds available for the CSD after deducting Tax and any General Salary Sacrifices is the remaining Gross LESS the PEA amount. For example:

CSD = $320, PEA = $700

Gross =1800
Tax = -600
General Salary Sacrifice  = -200
PEA = -700
AVAILABLE FOR CSD = 1800 - 600 - 200 - 700 = $300

In this case only $300 is available for paying the CSD.

What if there are other Deductions in the persons Pay other than General Salary Sacrifices and Tax?

If your employee also has other deductions in addition to Child Support, then these are applied AFTER you have applied the CSD. This includes Salary Sacrifices to Super and any other deductions types other than the CSD.

How do I make sure I have applied Deductions in the right order?

Follow these steps if you are receiving Warnings or are unsure of whether the CSD calculation is correct:

In the Employee's Pay Card...

  1. Enter the persons normal hours.
  2. Remove All Deductions from the persons Pay if any are present.
  3. Add any deductions of type General Salary Sacrifice (do NOT add Salary Sacrifices to Superannuation).
  4. If there is any NET pay available at this point, then add the Child Support Deduction to the Pay. 
  5. If a PEA is specified, ensure the CSD Amount does NOT reduce the employees NET pay at this point to a value LESS than the PEA. Adjust the Deduction value so that the NET pay is at least the PEA amount. If there is NO PEA amount, then pay as much of the Deduction as possible using the entire pool of NET available.
  6. You can now apply any other deductions to the employees Pay (even if the NET pay available at this point is less than the PEA).

What should I do if there are NO funds available to pay the CSD in a given Payrun?

Where the funds do not exist to pay the CSD (at all), you can either leave the Deduction out of the persons pay or add one of zero value. If you add the deduction it will appear on the Payslip.

Note that there are reporting procedures you must follow for communicating shortfalls to the Child Support agency. 


Useful References

Services Australia - Child Support Deductions

Services Australia - Protected Earnings Amount