A Deduction after tax will only reduce the employee's Net (take-home) Pay.
Note: Once an allowance has been processed in a transaction, the Taxed box is greyed out and cannot be changed. This is to prevent serious tax issues.
Create a Deduction after tax
Go to the Setup, Allowances, Add, Next.
Select the Allowance Type by selecting the correct radio button.
The Standard Allowance (the most common type) is for entering a $ value or a % to be paid each pay, per hour, per week, etc.
The Unit Based Allowance is not often used for a deduction.
Click Next.
On the Allowance Details screen In Description, type a suitable description.
In Type, select Deduction.
In Frequency, ensure it is set to Each Pay.
Make sure the Taxed box is not ticked.
You can leave the amount as zero, and then the Deduction can be reused.
Click Next.
STP2 Reporting screen
Please follow the instructions below depending on your STP status:
Before selecting STP Phase 2 Reporting Groups, click on the link below, as you must follow the ATO's withholding and reporting requirements - STP Phase 2 reporting – Quick reference guide.
Click Next.
Add the Deduction after tax to the General Ledger
If you don't need to set up the General Ledger Details, click Next.
On the Confirm New Allowance Details page, click Finish to close the Wizard.
The deduction is now ready to be used in Wages.
Include this deduction in your bank file to be paid to a third party
Go to Setup, Allowances, select the Allowance, and Edit.
Select the Bank tab.
Enter the third party’s banking details on this screen: Bank, Account Name, BSB, Account No, Reference and Bank Frequency.
Note: The Bank Frequency is an important field to determine how often the third party is paid. Options are Each Pay Run or End of Month.
Create a Reducing Balance for the deduction
Enter a Reducing Balance for this deduction, i.e., you are advised what the total amount owing is, as well as a per-pay repayment value.
Go to Employee, Select the Employee, Payments, Allowance, and Add.
Select the Description drop-down, select the deduction.
Tick the Override Default Amount box and in the Amount field, enter the value the employee wants to repay each pay. In the Limit field, enter the total value owed.
Note: Once the employee has paid the value in the Limit field, the deduction will automatically stop.