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Student Loans

Learn how to set up student loans in Greentree:

Standard Statutory re-payment

A taxation template should exist under HR > System > Payroll > Transaction Template Detail for every tax code that includes a Student Loan code — for example, M SL (or any of the other Code + SL tax codes). This is required for reporting to the IRD. For consistency, there should be a tax template for every tax code, even those that do not contain student loans.

The template detail can be set up in one of two ways:

  1. The Transaction Template detail contains both the tax transaction type and the student loan transaction type — for example, S and SL, M and SL (M); or
  2. The Transaction Template detail will only contain the Tax transaction type — for example, Transaction Template M SL has just the M transaction type selected. On the Payroll Employee Maintenance form, enter or select the employee then go to the Payroll tab | Tax tab. Select the Template. This could be M SL, S SL, etc. In the Other Tax Transactions table, select either SL (M) or SL tax transaction type.

Note: Use the SL (M) code if the income earned at this business is the employee's main income. If it is any other income, use the SL code.

Special Student Loan which replaces the Statutory repayment

Where the IRD has advised that the student loan is to be repaid at a rate or amount other than the current statutory rate for example, 2%, 10% etc, set up additional transaction types to cater for this. For example:

  • SL F - For repayments of a fixed amount.
  • SL P - For percentage based rates.

Any new transaction types set up for student loans must be added to the Student Loans tab on the IR Reporting Configuration form.

On the Tax sub tab on the Employee Maintenance form, select the template — for example, S SL, M, or SL. You must also enter the special transaction type on the line item. Do not add the SL transaction type to the line item if it already exists in the template.

When the pay is created, if student loan codes exist in both the template and the employee's record, Greentree Desktop checks the Student Loans tab on the Inland Revenue Reporting Configuration form to identify which codes are Student Loan transaction types, and only bring through the transaction types from the employee to the pay. If no transaction type exists against the employee, then it gets the SL transaction type from the template.

Note: If a threshold applies to the Special Student Loan, the Special Student Loan transaction type will need to set up as a scale, and you need a different transaction type for each special rate. Contact your support organisation for instructions on how to set this up.

Variations to Student Loans

Student Loan repayments may vary. You can use these student loan repayment deduction codes:

  • SLBOR Borrower Deduction. This is a voluntary deduction for additional student loan repayments for example, to pay the loan off sooner. An employee can elect to pay as a percentage or a rate.
  • SLCIR - Commissioner Deduction. Where there is a requirement by the IRD for an employee to pay additional student loan over and above the pay period repayment threshold — for example, to recover under deductions of Student Loan. This is a percentage set by the IRD.

These codes are required are to be printed separately on the Tax Remittance and included as separate lines in the IR348/EMS output file.

Setup for SLBOR

  1. Set up a deduction transaction either as a fixed amount; or as a percentage of an accumulator used for Gross Earnings. Multiple transaction types can be used. For example:
    1. SLP that has a calculation method that is a percentage of the taxable income.
    2. SLA that has a calculation method of Amount.
  2. On the Employee Maintenance form, enter or select the employee then go to the Deduction sub tab on the Payroll tab. In the Other Deduction Transactions table, select the transaction type that represents the SLBOR and enter the Rate or Amount if it is not already included on the deduction transaction type.
  3. Add the transaction types to the SLBOR tab on the Inland Revenue Reporting Configuration form. Select the SLBOR Deduction transaction types from the Unselected list.

Setup for SLCIR

  1. Set up an accumulator for student loans. Include all student loan transaction types in this accumulator (except SLBOR and SLCIR transaction types).
  2. Set up a deduction transaction type. There can only be one SLCIR TT.
    1. It is a Percentage accumulator and is based on an the accumulator set up in Step 1.
    2. Select the Reverse sign option.
    3. Select the Truncate result to option, and set the value to 2.
    4. If different employees have different rates, the rate should be entered to the employee's standing pay.
  3. On the Employee Maintenance form, enter or select the employee then go to the Deduction sub tab on the Payroll tab. In the Other Deduction Transaction table, select the transaction type that represents the SLCIR and enter the Rate if was not already included on the Deduction transaction type.

    From 1 April 2013, the Student Loan repayment rate increased from 10% to 12%. The maximum rate is 5% of 12% = 41.67% of the SL deductions on Main Income (over the pay period repayment threshold) for primary employment earnings.

    For Secondary Income this is 5% on the gross payment of salary or wages. Where the rate is 5%, this is equal to a further deduction of 41.67% of the deduction, so the rate entered for the employee is 41.67%.

  4. Add the transaction type to the SLCIR tab on the Inland Revenue Reporting Configuration form. Select the SLCIR Deduction transaction types from the Unselected list.