From Definitiv version 1.36 you can configure On Cost rate, Inflation rate as well as probability and discount factors. This can only be configured when a movement pay item is present in the accrual type.
1. On Cost Rate
The on-cost rate provides a percentage, on top of the cost of the leave itself that you can allow or provide for in the journal. This percentage can be made up of quite a few items, for example, Superannuation, Payroll Tax, and Leave Loading.
2. Inflation Rate
The inflation rate is added based on the prediction of inflation of the government. This is a quantitative measure of the rate at which the average price level for goods and services in an economy increase over a period of time.
3. Probability Factor
Probability factors can be used when calculating for example; The long service leave liability to provide for, based on each year of completed service.
During the first or second year of an employee’s service, it is not probable that they will reach the year of service which will entitle them to long service leave, and as such not something the business needs to consider providing for.
Moving into the fourth or fifth year of service, it becomes more probable that the employee will reach their year of service that entitles them to long service leave, the business then needs to start providing for this liability. This goes up to 10 years as a general rule.
Below is an example of a Long Service Leave probability factor for WA:
Discount Factor
The discount factor is the value of the sum of money given, specified on a rate of return. The discount rate is used to determine the present value of future cash flows.
Important Information
These percentages used for the above items cannot differentiate between States, only 1 percentage can be entered within an accrual type. If it is a requirement for the client to have a different percentage per State this needs to be hard coded into the client’s journal; keep in mind this will be an ongoing cost to have development update the percentage each time the client requires.
Using the above will determine when the movement pay item occurs in a pay run and the value of the movement.