To deduct child support payments from an employee's pay, you'll need to set up a deduction pay item in MYOB and assign it to the employee.
To learn more about your child support obligations, check the Services Australia website.
Let's step you through how to set up a child support deduction, then see what it looks like when you process a pay.
Go to the Payroll menu and choose Pay items. The Pay items page appears.
Click the Deductions tab.
Click Create deduction pay item.
Enter a Name for this pay item, such as "Child Support" or similar.
If you'd like a different, more personalised, name to show on pay slips for this deduction, enter a Name for pay slip, such as "Child Support - Steven". If you leave this blank, the pay item Name will display instead.
Choose the Linked payable account.
What's a linked payable account?
This is the account (usually a liability account) in which all the deducted money will be accrued. The Default Tax/Deductions Payable Account you specified when setting up payroll appears as the default.
You can change this default if you want to track the deduction separately. For example, if you're deducting union fees, create a Union Fees Payable liability account. This way, the balance sheet will display the deductions separately from your PAYG Withholding and other deductions.
Choose the ATO reporting category for this deduction. If you're not sure, check with your accounting advisor or the ATO. Learn about assigning ATO reporting categories for Single Touch Payroll.
Choose the Calculation basis.
User-entered amount per pay period - Select this option if you want to manually enter a specific amount for each employee each time you pay them. Note that manually entered deductions should be entered as negative values.
Equals a percentage of a pay item - This option allows you to enter a percentage of any of the wage pay items. This amount will be deducted until the deduction Limit (see below) is reached.
Select a wage pay item upon which the calculation is to be based. Alternatively, you can select Gross Wages or Federal Wages, which totals all wage pay items (hourly and salary) you pay an employee.
Equals dollars per pay period - This option allows you to deduct the specified amount per pay period, per month, per year or per hour. This amount will be deducted until the Limit (see below) is reached.
Choose an applicable Limit.
No limit - signifies no limit on the amount of money that can be deducted from the employee’s pay for this category.
Equals a percentage of wages - results in the maximum deduction amount being a percentage of a wage pay item. For example, a deduction might be $50 per pay period up to a maximum of 50% of the employee’s base salary. Gross Wages and Federal Wages are also available here which total all wage pay items (hourly and salary) you pay an employee.
Equals dollars per pay period - results in the maximum deduction being a fixed dollar amount per pay period, per month or per year. For example, a deduction might be 10% of the employee’s gross wages up to $1,500 per year.
Under Allocate employees, choose the employees who require this deduction. To remove an employee, click the delete ( ) icon for that employee.
Under Exemptions, choose any taxes that shouldn't be calculated on this deduction. For example, if it's a pre-tax deduction, select PAYG Withholding. If you're not sure if the deduction should be pre- or post-tax, check with your accounting advisor or the ATO.
When you're done, click Save.
After you've assigned a child support deduction pay item to an employee, it'll appear in their pay. Let's take a look:
Go to the Payroll menu and choose Create pay run.
Choose the Pay cycle and confirm the pay dates.
Click the employee to open their pay and you'll see the child support deduction.
Continue processing the pay as normal. Need a refresher?
Amounts deducted are allocated to your payroll deductions account, ready to be paid to Services Australia. See the FAQ below for more info.
Child support deductions need to be paid to Services Australia (learn about their payment options).
You can make a record of these payments in MYOB using a Spend money transaction (Banking menu > Spend money).
When recording the transaction:
In the Bank account field choose the bank account the payment is coming from.
In the Contact field choose the organisation the payment went to (you can set up a supplier for this purpose).
In the Account field choose the MYOB Payroll Deductions account.