How to Set up Child Support Deductions in Employment Hero Payroll
Introduction
This video explains how to automate child support deductions in Employment Hero Payroll, showing a step-by-step setup that can be configured once and maintained automatically. It demonstrates how to create recurring deductions, set preserved earnings thresholds, apply different deduction amounts over time, and pay directly to Services Australia. The tutorial also covers verifying the setup in a pay run, configuring bank account details to prevent employee edits, and handling ABA file submission through Single Touch Payroll. This guidance is relevant for businesses under the SCHADS Award or similar payroll frameworks, helping payroll administrators manage child support obligations accurately and efficiently.
Key Takeaways
- Child support deductions can be automated in Employment Hero Payroll for set-and-forget processing.
- Deductions can be configured with preserved earnings thresholds and stepped amounts over time.
- Payments are directed to Services Australia via a designated bank account and EFT code.
- Deduction start and expiry can be scheduled by date or amount to match payroll letters.
- Payroll processing automatically updates Single Touch Payroll and ABA files without manual intervention.
- Employee self-service access can be restricted to prevent edits to child support deduction settings.
Transcript
Introduction to Automating Child Support Deductions
Want to automate your child support deductions in Employment Hero Payroll? I'll show you how to set it up once and never touch it again. As an Employment Hero implementation specialist, we've helped hundreds of businesses automate these deductions correctly. In this tutorial, you'll learn how to set up recurring deductions, configure Services Australia payments, and verify everything works perfectly in your pay run.
Understanding the Payroll Letter
From time to time, you're going to get a letter like this sent through to payroll. This one is more complicated, but sometimes they'll start off with a certain amount, then step that amount up after a period of time, and that might continue. There's also a protected earnings amount, which changes every 12 months as CPI increases. That's the amount the employee has to earn before a deduction comes out.
Sometimes they'll provide BSB and account details on here and an EFT code; sometimes they don't. That information is available on the Services Australia website, so check there if your letter doesn't have it. That's the information we need.
Planning the Deduction Setup
We can see here that we're going to have one pay period at $361, then it will step up to $393. Let's see how we can create that in an employee's file. First, go to the employee and pay run inclusions, and click "Add" next to deductions. For a deduction category, you should already have one called "Child Support Deduction."
Setting Up the First Deduction
We'll choose "Fixed" as the amount for the first deduction: $361.57. This won't be paid manually; it's going to a bank account. I've set up Services Australia's bank account in the employee's record, which I'll show in a second. We'll choose "Preserved Earnings," meaning the deduction will only occur once a minimum net earnings amount has been reached. We'll use the amount listed in the letter. You might need to update this amount every 12 months.
For the payment reference, pick up the EFT code. This identifies you as the person paying this amount to Services Australia. We'll start the deduction—I'll backdate it a year so it comes through—and expire it either after a certain date or after a certain amount. In this case, we'll expire it after one payment of $361.57.
Setting Up the Second Deduction
If you want a "set and forget" setup, you can do the second deduction at the higher amount as well. Add another child support deduction, choose "Fixed," and enter the higher amount, $393.44. Again, pay to Services Australia's bank account. The preserved earnings amount will remain the same. Use the EFT code for the payment reference. Defer the start date by two weeks; for example, if recording today is 22nd November, set it to 6th December. This deduction will continue and won't expire. Click "Save."
How the Setup Works
Effectively, instead of handling this on payday, you set it up as soon as you get the letter. When you run your pay run, as long as the employee earns the required amount, the deduction will come out. It will send through the ABA file to Services Australia. With Single Touch Payroll reporting, Services Australia will also know that the deduction has been made.
Bank Account Configuration
A note on bank accounts: the reason I could choose Services Australia when setting up the deduction is that I had a second bank account for them. I entered the BSB and account number, unticked it so the employee can't edit it, and saved. That way, if the employee logs in via the self-service portal, they can't change the deduction.
Running a Pay Run Example
Let's run a pay run to see how it looks. I'll create a new pay run with today's date, 22nd November. At the moment, it's empty—no timesheets. You'll see a zero earnings line with a deduction amount that hasn't hit the preserved earnings limit.
Now let's add an earnings line. Suppose the employee worked 100 hours this fortnight at $40 per hour. This will exceed the preserved earnings limit, and the $361.57 deduction will be applied. When you finalize the pay run and download the ABA file, it will create a line to pay that $361 to Services Australia. There's no separate process through accounts payable.
Conclusion and Tips
This setup is "set and forget," works every payday, and lets you handle deductions ahead of time. I think it's a great tip. If you want more tips like this, reach out—we're always happy to share. Thanks very much.