Deduction Codes
The Deduction Code parameters are used to define those deductions that are pertinent to the user's organization. The calculation of deductions varies greatly within an organization and between organizations. Therefore, many options exist to define individual deductions. The main distinguishing criteria between different deductions are the group and type.
Below is a list of the different groups and types in the system. Choose the one which describes the deduction being added/changed, then refer to the specific group and type on the following pages.
Group | Type | Description |
|---|---|---|
0 | 0 | Arrears - deduction for arrears accumulation |
0 | 1 | Advance and Reclaim Deduction |
0 | 3 | Percent of Net Pay Deduction |
0 | 4 | Pre-Authorize Debit Deduction |
0 | 5 | Employer Payroll and Benefit Tax |
1 | 0 | Pension - fixed amount with yearly limit (if any) |
1 | 1 | Pension - percentage of earnings or hours with limit (if any) |
1 | 2 | Pension - percentage of earnings with minimum |
1 | 3 | Pension - a 2 step calculation with 2 percentages current pensionable earnings are used |
1 | 4 | Pension - a 2 step calculation with 2 percentages year-to-date pensionable earnings are used |
1 | 5 | Pension - percentage of earnings minus the CPP amount |
1 | 6 | Pension - a 2 step calculation with 2 percentages |
1 | 8 | Pension - a 2 step calculation with 2 percentages also using minimum hours, exemption $, and 2 employer's percentages |
1 | 9 | Pension - a 2 step calculation using the annual YMPE specifically for Municipal and Teachers BC Pensions and Ontario Teachers Pension |
2 | 0 | Union - fixed dollar amount with limit (if any) |
2 | 1 | Union - percentage of earnings with limit (if any) |
2 | 2 | Union - percentage of earnings with minimum |
2 | 4 | Union - percentage of earnings with deduction limit |
2 | 5 | Union - percentage of earnings with minimum and maximum |
2 | 6 | Union - fixed dollar amount or rate per hour/day with limits (if any) |
2 | 7 | Union - fixed dollar amount with limit using a table |
2 | 9 | Union - based on average hourly wage or function line pay rate times a factor with an optional minimum hour limit. Also includes optional additional flat amount. |
3 | 0 | Life - fixed dollar amount with limit (if any) |
3 | 1 | Life - percentage of earnings with limit (if any) |
3 | 2 | Life - percentage of earnings with minimum |
3 | 3 | Life - a 2 step calculation with 2 multiples of earnings |
3 | 4 | Life - a percentage of actual coverage based on age |
3 | 5 | Life - a rate time multiple of earnings based on age |
3 | 6 | Life - based on hourly rate and base rate |
3 | 7 | Life - annual salary times rate/100 from extras |
3 | 8 | Life - fixed optional coverage - rate varies with age |
4 | 0 | Volunt - fixed dollar amount with limit (if any) |
4 | 1 | Volunt - percentage of earnings with limit (if any) |
4 | 2 | Volunt - percentage of earnings with minimum |
4 | 4 | Volunt - percentage of earnings with deduction limit |
4 | 5 | Volunt - fixed dollar amount with limit (if any) (employer share in extras) |
5 | 0 | NonVol - fixed dollar amount with limit (if any) |
5 | 1 | NonVol - percentage of earnings with limit (if any) |
5 | 2 | NonVol - percentage of earnings with minimum |
5 | 4 | NonVol - percentage of earnings with deduction limit |
6 | 0 | EI - if using only one tax group |
6 | 1 | CPP - if using only one tax group |
6 | 2 | FedTax - if using only one tax group |
6 | 3 | ProTax - if using only one tax group |
6 | 4 | Pension - Provincial if using only one tax group |
6 | 5 | Garnish - if using only one tax group |
6 | 6 | - income tax exemption |
6 | 7 | - special EI calculation |
7 | X | Stat. - for second tax group |
8 | X | Stat. - for third tax group |
9 | 0 | F.I.C.A. (US) |
9 | 2 | Federal Income Tax (US) |
9 | 3 | State Income Tax (U.S) |
9 | 4 | The same settings as Group 9 Type 0 Medicare |
9 | 7 | EIC Advance Payment (US only) |
Reserved Codes
In addition to all the user-defined pay codes in the database that may be selected for use in the include/exclude lists, certain 'reserved codes' may also be used. The 'reserved codes' and their meanings are as follows:
- SA - Represents the employee's base salary
- AN - Represents the employee's annual salary
- RA - Represents the employee's hourly pay rate
The fields Factor, Frequency, Limit, and Share % on the deduction code database relate directly to the employee's deduction fields of Amount, F (frequency), Limit, and Share %. When a deduction is added to an employee the values defined in the database are used as defaults to load the employee's deduction. These fields can be changed per employee for maximum flexibility in deduction definitions. The payroll system will use the values for these specific fields as defined on the employee, not the values on the deduction code database.
In order to facilitate changing of one or all these fields on employees, a global change option exists. When one or more of the specific fields are accessed in the deduction code database (an actual change to the field is not necessary) you are asked if you want to do a Global Change. When you answer yes to this prompt you have then activated the global change pending setting(s) for the fields accessed on that deduction code. The deduction code database screen and report both list when a deduction has a Global Change Pending and which fields are set to be updated.
In order to update the employee's deductions with the changes you must then run the Global Deduction Changes process.
This deduction code update feature would be used for example, when rate changes (Factor/Amount) are made at the beginning of the year.
When a new deduction code is generated you have the option of activating a Global Deduction Additions. When a deduction is set with a Global Additions and the Global Deduction Changes is run, the new deduction will be added to all employee. You can also trigger a global deduction addition for a deduction that already exists in the deduction code database by entering 'AD' at the field to change prompt while in deduction code changes for the deduction. When you run a global deduction addition for an existing deduction, the employees who already have the deduction will have the four special fields updated with the values defined in the database, but the deduction will not be added a second time.
HINT: The employees extra option tax is defined on the specific employee's income tax deduction on the Amount field. In order to clear out all extra optional tax just access the Factor field on the income tax deduction and say yes to the Global Changes. The Factor field on the income tax deduction should be empty and so you would be updating the employee's individual tax deductions with a blank amount, thus clearing the extra tax.
Deduction Codes are documented in the following format: The following sample page has the standard response required for most prompts. Prompts 3, 4, 8, 9, 10, 15 and 16 vary for each deduction code and detailed under each group and type. If any standard response varies from the sample, these are detailed under the group and type, otherwise refer to the sample page for the correct response.
Code
Enter a 2-digit numeric deduction code. Valid deduction codes range from 01 to 99. To list defined valid codes, Use look-up. See Appendix C. Deduction codes are stored on the employee file, and reports are processed listing deduction codes in order from smallest to largest deduction code.
Define primary deductions such as Income Tax and CPP as lower numbers so these deductions will appear at the top of the employee's list of deductions.
Description
This prompt allows up to 30 alphanumeric characters. Enter a description that adequately describes the deduction. Many reports only display the first 10 to 15 characters of the description (to save room) therefore the first portion of the description should attempt to uniquely identify the deduction.
If short description is used, specific options will use this short description in place of the truncated deduction code description. Options where the deduction short description has been implemented include:
Group
See each Group and Type Code for correct response.
Type
See each Group and Type Code for correct response.
Freq
A frequency code used to calculate deduction in the proper period. To list valid codes already defined, Use look-up.
Table
- Enter 'Y' if this deduction uses a table from the deduction rate table data base to establish the amount to be deducted (see option #28 on the database.)
- Enter 'N' if deduction is calculated according to the group and type code.
Factor
Limit
Share %
See each Group and Type Code for correct response for the 3 prompts listed above.
Vendor #
- Enter a valid vendor number. The deduction amount from this deduction will be invoiced to the vendor. The Payroll Stream, Cheque Cancellations, Manual Cheques, Year To Date Adjustments and Statement History Adjustments will generate interface files for interfacing into the Finance Invoice system.
NOTE: Deductions that are table deductions do allow a vendor number to be defined on the deduction table level. This allows different vendor numbers to be used per deduction table.
Arrears
- Enter 'N' if arrears are not to be collected.
- Enter 'S' if arrears are to be collected using the Arrears To Deduction method. This arrears method allows the arrears to accumulate under a previously defined arrears deduction. Refer to documentation on Group 0 Type 0 Arrears Deductions for more information regarding this option.
If 'S' was selected on the Arrears prompt, the following will appear:
ARR DED
- Enter a previously defined arrears deduction. An arrears deduction is a Group 0 Type 0 deduction.
- Entering without a valid arrears deduction returns you to the Arrears prompt. A valid arrears deduction must be entered when using the 'S' option on the Arrears prompt.
Zero Balances
This field is used by the Zero Employee Earnings/Deductions program. Your selected option affects the clearing of year-to-date totals in the deductions on your employee master records.
- Enter 'Y' if this deduction should be cleared at calendar year end. The clear program will set the year-to-date values to zero on all deductions when the 'zero' program Clear Year to Date option is selected.
- Enter 'S' if this deduction needs year-to-date totals which do not correspond to the calendar year end. The 'zero' program requires the specific deduction numbers to be cleared during the zero run when the 'S' selective is used.
- Enter 'N' if you do not want this deduction cleared. Use of this option places control over the zeroing of the deduction year-to-dates because this option must be changed to 'Y' or 'S' before the deduction can be zeroed.
Field Lock
- Enter if no restrictions on field changes exist. The field lock allows specific deductions to be set to disallow changes to specific fields. Locking applies to changes made in the Employee Record Additions and Employee Record Changes. You may enter one or all field characters to restrict changes any combination of fields.
Table entry changes are also blocked on deductions that are set as a table deduction and have either the Amount or Share locked.
- Enter 'A' to lock changes to the Amount (factor).
- Enter 'L' to lock changes to the Limit field.
- Enter 'S' to lock changes to the Share field.
- Enter 'F' to lock changes to the Frequency field.
- Enter 'T' to lock changes to the Table Deduction Entry Code.
Step
See each Group and Type Code for correct response. NOTE: Sets of entries on the Step line must be separated by a comma. A comma must also follow the last entry.
Extras
See each Group and Type Code for correct response. NOTE: Sets of entries on the Extra line must be separated by a slash '/'. A slash must also follow the last entry.
GL Expense
- Enter an override expense GL account. This GL account may contain the wildcard character. This expense GL account will override the use of the Default Benefit GL from the employee's costing as well as the Default GL from the cost center. Refer to the Payroll GL Costing Rules document for details on GL costing.
GL LIAB.
Enter the GL account number to receive the employer and employee's share.
Earn
- Enter 'I/##,##,##,' where ## are the pay codes to include for the eligible earnings of this deduction. Follow the last code with comma.
or (if list is shorter):
- Enter 'E/##,##,##,' where ## are the pay codes to exclude from the eligible earnings and include all the rest. Follow the last code with comma. The pay code list continues onto a second line.
Deds
- Enter 'I/##,##,##,' where ## are the deduction codes to include as benefits which are eligible as earnings for this deduction. Enter last code with a comma.
or (if list is shorter):
- Enter 'E/##,##,##,' where ## are the deduction codes to exclude as benefits which are eligible as earnings for this deduction and include all the rest. Follow last code with comma.
Registration #
On registered Pension or Charitable deduction codes, enter the numeric only registration number. The Canada T4 process uses this registration value.
EXT Name
- Entry any further name definition that might be useful in identifying the deduction.
RPP Maximum
This field applies to Pension or Group 1 deductions only. For non-pension deductions leave this field as zero.
- Enter the maximum amount of register pension contributions allowed to be tax exempt. The Income Tax Act only permits registered pension contributions up to $1000 + (70% X Pension Adjustment for the year). For 2002 the PA limit was 14,900. This equals an RPP Maximum of 11,430.00 (1000 + (.70 x 14900) = 11,430.00).
Employees pension contributions over this RPP Maximum do not reduce the taxable income. The T4 process will limit pension contributions reported to this maximum. Both processes will generate a message in the log when an employee's pension has exceeded this RPP Maximum.
Affiliation
- Enter the Union Affiliation for applicable Union Dues or Group 2 deduction codes.
For Ontario Teacher reporting, enter the recognized union acronym to correlate with the Teachers Pension Reporting:
- OSSTF = Ontario Secondary School Teachers Federation
ETFO = Elementary Teachers Federation Ontario
OPSTF = Ontario Public School Teachers Federation
OECTA = Ontario English Catholic Teachers Assoc. Elementary
AEFO = Association Des Enseignantes Et Des Enseignants Elementary
AEFO = Association Des Enseignantes Et Des Enseignants Secondary
OECTA = Ontario English Catholic Teachers Association Secondary
CPCO = Catholic Principals Council Of Ontario
OPC = Ontario Principals Council
ADFO = Association Des Directions Et Directions Ddjointes Des Ecoles Franco-Ontariennes
Other