Create Earnings and Deduction Codes for Long Service Leave: Normal Termination, Accrual After 17 Aug 1993

(Australia only) Steps to create earnings and deduction codes for Long Service Leave.

If you need to make payments to an employee for unused leave, you must create an earnings code for the type of annual leave, and a deduction code for taxation purposes.

  1. In the PR Earnings Codes form, create an earnings code. When doing so, select ETPL - Employment Termination, Long Service Leave from the ATO Category drop-down on the Addl Info tab. For more detailed instructions, see Setting Up Earnings Codes: Australia.
  2. In the PR Deductions / Liabilities form, create a deduction code for taxation purposes. When creating the code, use the following settings:

    • In the Routine field, select R-Routine from the Method field and enter ETPMargina.

    • From the ATO Category field on the Addl Info tab, select Tax Withheld.

    • On the Basis Codes tab, enter the corresponding earnings code(s).

      Important: In order for the ETP deduction to be calculated during payroll processing, you must also enter this deduction code in the DLCode column of the PR Federal Info form (Add'l Federal Based Dedns/Liabs tab).
    For more information, see Creating Deduction and Liability Codes.
  3. For the earnings code you set up in step 1, visit the PR Auto Termination Pay Setup form and enter an ETP type record. For more information, see Setting Up Automatic Long Service Leave ETPs.
Note: During processing, the system calculates the tax based on marginal rates for all accrual dates that occur after 17 August 1993. The payment amount is treated like an annual bonus for tax purposes. If the payment amount is under the amount specified in the Leave Flat Rate Limit field (PR Limits and Rates form), the system does not use the marginal rates and instead withholds the lesser of:

  • the standard calculated amount or

  • the rate specified in the Leave Flat Rate field (PR Limits and Rates form).