There are two other codes that may apply to the employee's student loan as extra deductions, these are:
- SLCIR which is a "Commissioner deduction" and is used for required additional student loan repayments. Inland Revenue Department (IRD) will advise you if additional deductions are to be made using SLCIR.
- SLBOR which is a "Borrower deduction" and is used for voluntary additional student loan repayments. For SLBOR deductions, the employee will advise you if they wish to make additional payments to reduce their loan balance.
In addition to the above, there is a Special Deduction Rate (SDR) which is a special Student Loan rate you will use and apply to the employee only if advised by the IRD.
The above codes do not replace the employee's tax code, it is an additional code. SLCIR, SLBOR and SDR can only be applied if there is a student loan deduction tax code entered for the employee. For example M SL, ME SL, S SL, SH SL, SB SL and so on.
This article will go through the SLBOR deduction.
SLBOR
SLBOR is for voluntary extra student loan deductions requested by the employee to help pay off their student loan faster.
The employee can also stop the voluntary extra deductions at any time. No authorisation is required from IRD.
To set up SLBOR deduction, go to the employee file and then to "Pay Run Inclusions". You will see this screen.
- Click on 'Add'.
- Select the "Student Loan Deduction (SLBOR)" deduction category from the drop down list.
- Enter the deduction amount to be applied per pay run of "Fixed", "Percentage of Gross", "Percentage of Net" or "Percentage of Student Loan".
- Enter of percentage or dollar value amount for SLBOR deduction.
- Select the deduction to be "Paid to the IRD".
- Select preserved earnings (if required). More details on preserved earnings can be found here.
- Enter any notes if you want the employee to see them on their pay slip.
- Enter the date this inclusion is to commence.
- Choose when this inclusion should cease.
- Click on 'Save'.
Below is an example of an SLBOR deduction.
Once the employee's SLBOR deduction is saved, the details will display under the Deduction line. If you need to make any edits, click on the "Student Loan Deduction (SLBOR)" text which will expand the details again, make the required edits and click on save.
An example of the employee's SLBOR deduction in a pay run.
If you had selected deduction to cease "After the following amount has been reached", then when you finalise a pay run, you will notice in the employee's file, in the Pay Run Inclusions, the SLBOR deduction will display the SLBOR total amount paid so far.
Once the SLBOR expiry date or specified amount has been reached then the SLBOR deduction will stop.
To delete the deduction, hover to the far right until the 'x' appears and then click on the 'x' icon.
A "Confirm delete" popup will appear. Click on 'OK' to continue with the deletion.