Student Loan - SLCIR and SLBOR

As employers, there are instances where you may be required by the Inland Revenue Department to process compulsory extra student loan deductions or where an employee requests you to make extra voluntary repayments on their student loan on their behalf through payroll.

For SLCIR deductions the IRD will issue the employer with a notice to recover extra payments. This is usually in the form of a debt amount to be recovered at the rate of 5%. (Note: this will appear in the system at the rate of 41.67% as 41.67% of 12% is 5%).

For SLBOR deductions the employee will notify their employer and request that additional payments are made each pay run for the employee. This may be where the employee wishes to process a higher amount for their student loan.

SLCIR

To process an SLCIR deduction navigate to the Employee tab > Pay Components and click on the Deductions hyperlink within the Employee Pay Components.

Once in the Deductions Assignment dialogue box select the component called 'Student Loan Compulsory Repayment'

The next step will be to set the effective from date which will likely be the beginning of the current pay period you are in at the time the deduction is applied to the employee. Click Ok.

In the Student Loan Compulsory Repayment Values, you will need to enter in a value into Percentage To Deduct, which in most cases will be 5%, which will appear as 41.67% in the pay packet (which is 5% of 12%).

The IRD will also send through a letter to the employee which will advise of the overall debt amount to be repaid. A percentage is applied in the instance the employee's income is variable, so that a relative proportion is taken for the extra student loan recovery amount.

SLBOR

To process an SLBOR deduction, follow the same steps as the SLCIR component, apart from assigning values to the component.

When we assign values, our options are to select from the 'Extra Contribution Deduction Type' and a 'Percentage To Deduct'.

If the Extra Contribution Type is set to Fixed Amount enter the value in the 'Amount To Deduct' field. If set to 'Gross %' enter in a 'Percentage to Deduct' for the employee (from their Gross income).