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How to process Student Loan (SL) repayments

This tutorial explains how to process Student Loan (SL) repayments in Attaché Payroll for New Zealand employees.

Before you begin

In New Zealand, all full-time workers earning an annual salary which is over the Student Loan Threshold amount, must make compulsory student loan repayments to the Inland Revenue Department (IRD). To ensure the correct compulsory payment is made by the employee, the correct Tax Code must be set up on the employee masterfile.

To select a student loan tax code for the employee:

  1. Choose Masterfiles | Payroll | Employee Details | Maintain.
  2. Enter the Employee Code and choose the Tax tab.
  3. In Tax Code select the appropriate tax code for the employee that incorporates the SL. For example, M SL = Main Income + Student Loan.
  4. Choose Accept (F9).

If the employee only pays the regular compulsory rate, then you are ready to process transactions.

Some employees may have their payment conditions altered by the following;

  • Reduced payments at a Special Deduction Rate based on an application approved by the Commissioner of Inland Revenue.
  • Voluntary extra payments by choice of the employee.
  • Compulsory extra payments as directed by the Commissioner of Inland Revenue.

Reduced payments at a Special Deduction Rate (SDR)

If the employee has a Special Deduction Rate (SDR) Certificate from the Commissioner of Inland Revenue advising that they are entitled to a reduced SL payment rate, then you must apply a SDR rate to the employee’s SL payments.

To apply a SDR rate:

  1. Choose Masterfiles | Payroll | Employee Details | Maintain.
  2. Enter the Employee Code and choose the Tax tab.
  3. Select the SDR Cert. check box.
  4. Enter the SDR End Date. The special deduction rate will only be applied until this date.
  5. Select the SL Override check box.
  6. Enter the SL Deduction Rate as a decimal (e.g. enter 5% as 0.05).

You are now ready to process transactions at the reduced rate.

Voluntary extra payments (SLBOR)

If an employee voluntarily decides to make extra SL payments, you will need to add a SLBOR deduction to their standard pay.

To set up a voluntary extra SL payment deduction:

  1. Choose Setups | Payroll | Deductions | Maintain.
  2. Enter a new Deduction Code.
  3. Select the Type = SLBOR$ (NZ), SLBOR% (NZ), or SLBOR% over SL Threshold (NZ).
  4. In EMS Tax Report Code select 1 = Include in EMS Tax Report Totals.
  5. Complete the remaining fields as required, choose Accept (F9).

Before you can process transactions you will need to add this deduction to the employee’s standard pay.

Compulsory extra payments (SLCIR)

If the IRD has requested that an employee make extra SL payments, you will need to add a SLCIR deduction to their standard pay.

To set up a compulsory extra SL payment deduction:

  1. Choose Setups | Payroll | Deductions | Maintain.
  2. Enter a new Deduction Code.
  3. Select the Type = SLCIR% (NZ).
  4. In EMS Tax Report Code select 1 = Include in EMS Tax Report Totals.
  5. Enter a fixed or variable deduction rate.
    Note: The SLCIR% indicated on the IRD notice is a percentage of the standard Student Loan deduction. That is, the amount deducted using the employee's Tax Scale. For example, a 41.67% SLCIR rate on the Special Deduction Rate Certificate is entered as 5% in the SLCIR Deduction setup (That is, 41.67% of the standard 12% deduction). 
  6. Complete the remaining fields as required, choose Accept (F9).

Before you can process transactions you will need to add this deduction to the employee’s standard pay.

Expiry date for compulsory extra payments SLCIR
If there is an expiry date on the requirement to make extra payments, you may wish to select the SDR Cert. check box in the Employee Masterfile and set a SDR End Date. If an SLCIR deduction is included on an employee payment after the SDR Expiry date, then a warning message will be printed on Check Pays report.
It may also be helpful if you set up a payment schedule to automatically stop the deduction based on the extra payment conditions. For example, an end date or total amount. For details on setting up payment schedules in Attaché Payroll, see Payment Schedule Maintenance.

Checking the YTD student loan payment amount

To check the YTD student loan repayment for an employee:

  1. Choose Masterfiles | Payroll | Employee Details | Enquire.
  2. Enter the Employee Code.
  3. Choose Lump Sum (F3).
  4. The amount is displayed in the Student Loan Repayment field.


REF: S0046.02 280116 3.2 SF 4376, 3845, 3873   KCS 000047745   000047752