Student Loan SLCIR Not Deducting when Below the Repayment Threshold

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Contributing User CarlBenton
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Student Loan SLCIR Not Deducting when Below the Repayment Threshold

I am using MYOB Payroll 2019.1 and I have found that the SLCIR compulsary deductions are not being deducted on pay periods where the employees pay is below the Student Loan repayment threshold. This means that in cases where the employee has a SLCIR amount to repay, but then drops their hours down and does not earn above the repayment threshold, the SLCIR amount does not get deducted. It has been happening for an employee of mine for several months now and he still has a balance due, and the IRD has sent a second letter.

 

I believe this to be a bug. The IRD website has changed a bit, but in this cached page it stated that 'Your employee doesn't have to be earning over the pay period repayment threshold to have extra deductions made from their salary or wage'. I see nowhere that this has changed, so should Payroll not be deducting the SLCIR every pay cycle regardless of whether they are over the threshold or not?

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Contributing User CarlBenton
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Re: Student Loan SLCIR Not Deducting when Below the Repayment Threshold

I had the impression that this forum was where to go to get help, but after 6 days there are no replys. Smiley Sad Do no MYOB support employees monitor these forums at all? I would appreciate any help considering this looks like a bug in MYOB Payroll.

Ultimate Partner jenniek
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Re: Student Loan SLCIR Not Deducting when Below the Repayment Threshold

Hi @CarlBenton 

I read your forum post a few days ago - but it is an interesting one. My understanding is that extra student loan deductions are not taken if normal student loan hasn't reached the threshold. But I can't be sure of this either. We discussed it in our office and thought it wouldn't take the extra deduction - as we had an example of a client employee getting an SCLIR deduction notice - but wasn't even on an SL code. We couldn't set this up without changing to an SL code. I'm not aware there has been a change within Payroll to change this.

Regards,
Jennie Kingma
JK Business Systems Ltd, Hamilton, NZ
Email: jennie@jkbusiness.co.nz
Contributing User CarlBenton
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Re: Student Loan SLCIR Not Deducting when Below the Repayment Threshold

Thank you for posting Jennie, I appreciate your input. It seems strange to me that deductions would not be taken unless the threshold is reached, because in cases where an employee has a SLCIR to pay, but their hours have dropped and so they are always under the threshold, then the SLCIR does not get paid.

I think the first step is to find out whether the deductions should be made or not. Is anyone from MYOB able to help with this?

Ultimate Partner jenniek
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Re: Student Loan SLCIR Not Deducting when Below the Repayment Threshold

Hi @CarlBenton 

I'm intrigued now - I'll ask when I next talk to MYOB - and post back if I get an answer.

Regards,
Jennie Kingma
JK Business Systems Ltd, Hamilton, NZ
Email: jennie@jkbusiness.co.nz
Ultimate Partner jenniek
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Re: Student Loan SLCIR Not Deducting when Below the Repayment Threshold

Hi @CarlBenton 

I was talking to MYOB yesterday and asked this question - I am advised the SLCIR does not get deducted if the student loan threshold is not reached - as this would likely affect the 60% net pay requirement - ie - an employee is entitled to receive 60% net earnings of his normal pay before deductions like SLCIR, court fines etc are deducted. Hope this helps.

Regards,
Jennie Kingma
JK Business Systems Ltd, Hamilton, NZ
Email: jennie@jkbusiness.co.nz
Contributing User CarlBenton
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Re: Student Loan SLCIR Not Deducting when Below the Repayment Threshold

Jennie,

  Thank you for the post. I am still suprised that MYOB do not seem to bother about watching these forums to help their customers, but I am thankful for your contribution!

 

  I assume when you say '60% net pay requirement' you are talking about the protected net earnings? If so, this IRD page states that this only applies to child support deductions, and actually specifically states that other deductions are still taken even if it goes over the 40% amount. This also seems to be backed up by the information on page 14 of the IR335 Employers Guide: "Protected net earnings apply to child support only. You must still make other deductions such as student loan repayments, KiwiSaver deductions, insurances, superannuation and union fees from the protected net earnings."

 

  I also found the MYOB page that you may be referring to. However, if these two pages are talking about the same thing, then it appears that MYOB has gotten it wrong, as the protected net earnings only applys to child support deductions.

 

  What are your thoughts?

Ultimate Partner jenniek
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Re: Student Loan SLCIR Not Deducting when Below the Repayment Threshold

Hi @CarlBenton 

I tend to agree - yes I was talking about protected net earnings (sorry my wording wasn't great for a Friday) - I didn't think SLCIR was affected by this - wondering if the last MYOB update has changed this. I'll investigate further.

Regards,
Jennie Kingma
JK Business Systems Ltd, Hamilton, NZ
Email: jennie@jkbusiness.co.nz
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