News · Payroll & Finance
New Student Loan Repayment Codes
September 16, 2011
This week FlexiTime received an email from the IRD containing an advance copy of the IR Electronic Filing Payroll Specification Student Loan Change document. The document outlines changes to student loan repayment legislation that became law in August and will be implemented in April 2012.
The legislation according to the IRD,
“…will not only impact on a number of student loan borrowers but also the vast majority of employers”.
It will also impact payroll software providers such as FlexiTime.
The changes relate to a restructuring of student loan repayment obligations and the addition of new student loan codes… that’s right MORE tax codes. From April 1 all borrowers will be required to have a student loan repayment code (SL) regardless of whether their income is over the threshold, unless they have been granted an exemption. There are two new tax codes for student loan employees SB SL and ML SL, and brand new student loan repayment codes: SLCIR (Commissioner of IR required reduction) and SLBOR (Borrower additional deduction) which will be used in the situation where additional student loan payments are required.
The annoying aspect of these changes for us is that the Student Loan working group has decided to implement the reporting of additional student loan payments as extra lines in the Employer Monthly Schedule, most likely to save them costly computer resources. However, it means that we are left with a bit of work to do to implement the new changes.
All payroll software developers will have the same work to do though, as software needs to be updated and released prior to the law change to remain compliant with the IRD. However, we love change, because this is when the benefits of cloud computing or software as a service (SaaS) providers like FlexiTime really become apparent.
From April the only change a FlexiTime user will notice is the addition of the new student loan codes to choose from. That’s all. Unlike a desktop based system such as MYOB, there is no expensive new software to purchase, no download, no installation, and no back up of records required. It just happens, flawlessly and for free.
This is not just applicable to this particular law change. As well as changes to student loan repayments, payroll systems are constantly affected by amendments to the Holidays Act, tax laws, and employee entitlements. We will always try to reduce the impact of these changes to our customers.
Find out more about the benefits of FlexiTime’s online payroll software.